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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
Commission file number: 001-38520
MEIRAGTX HOLDINGS PLC
(Exact name of registrant as specified in its charter)
Cayman Islands
(State or other jurisdiction of
incorporation or organization)
450 East 29th Street, 14th Floor
New York, NY
(Address of principal executive offices)
98-1448305
(I.R.S. Employer
Identification No.)
10016
(Zip Code)
(646) 860-7985
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Ordinary Shares, $0.00003881 par value per share
Trading Symbol(s)
MGTX
Name of exchange on which registered
The Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☐
☒
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☒
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of June 30, 2022, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the registrant’s ordinary shares held by non-affiliates of the
registrant was approximately $242,659,643 (based upon the closing sale price of the registrant’s ordinary shares on that date on the Nasdaq Global Select Market).
As of March 8, 2023, the registrant had 48,666,263 ordinary shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement relating to its 2023 annual shareholder meeting to be filed with the SEC within 120 days after the end of the fiscal year ended
December 31, 2022 are incorporated herein by reference in Part III of this Annual Report on Form 10-K.
Table of Contents
PART I
CONTENTS
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Item 5.
Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of
Equity Securities
Reserved
Management’s Discussion And Analysis Of Financial Condition And Results Of Operations
Item 6.
Item 7.
Item 7A. Quantitative And Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Item 9A. Controls And Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Financial Statements And Supplementary Data
Changes In And Disagreements With Accountants On Accounting And Financial Disclosure
PART III
Item 10. Directors, Executive Officers And Corporate Governance
Item 11.
Item 12.
Executive Compensation
Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder
Matters
Item 13. Certain Relationships And Related Transactions, And Director Independence
Item 14.
Principal Accountant Fees And Services
PART IV
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (the “Form 10-K”) contains forward-looking statements that can involve substantial
risks and uncertainties. All statements other than statements of historical facts contained in this Form 10-K, including
statements regarding our future results of operations and financial position, business strategy, financing arrangements,
prospective products, product approvals, research and development costs, future revenue, timing and likelihood of success,
plans and objectives of management for future operations, future results of anticipated products and prospects, plans and
objectives of management are forward-looking statements. These statements involve known and unknown risks,
uncertainties and other important factors that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,”
“anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,”
“would” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this
Form 10-K are only predictions. We have based these forward-looking statements largely on our current expectations and
projections about future events and financial trends that we believe may affect our business, financial condition and results
of operations. These forward-looking statements speak only as of the date of this Form 10-K and are subject to a number of
risks, uncertainties and assumptions described under the sections in this Form 10-K entitled “Item 1A. Risk Factors” and
“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this
Form 10-K. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be
predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements
as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be
achieved or occur and actual results could differ materially from those projected in the forward-looking statements.
Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it
is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do
not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new
information, future events, changed circumstances or otherwise. Thus, one should not assume that our silence over time
means that actual events are bearing out as expressed or implied in such forward-looking statements.
You should read this Form 10-K and the documents that we reference in this Form 10-K and have filed as exhibits to this
Form 10-K, completely and with the understanding that our actual future results may be materially different from what we
expect.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.
These statements are based upon information available to us as of the date of this Form 10-K, and while we believe such
information forms a reasonable basis for such statements, such information may be limited or incomplete, and our
statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant
information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these
statements. These statements should not be relied upon as representing our views as of any date subsequent to the date of
this Form 10-K.
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RISK FACTOR SUMMARY
We are providing the following summary of the principal risk factors contained in this Form 10-K to enhance the
readability and accessibility of our risk factor disclosures. We encourage you to carefully review in their entirety the full
risk factors set forth in the section of this Form 10-K captioned “Item 1A. Risk Factors” for additional information
regarding the material factors that make an investment in our ordinary shares speculative or risky. These risks and
uncertainties include, among others, the following:
● We have incurred significant losses since inception and anticipate that we will incur continued losses for
the foreseeable future, and may never achieve or maintain profitability.
● We will require additional capital to fund our operations, which may not be available on acceptable
terms, if at all.
● We may not have sufficient cash flows or cash on hand to satisfy our debt obligations or covenants under
our financing arrangements, or we may not be able to effectively manage our business in compliance
with such covenants.
● We are heavily dependent on the success of our Most Advanced Product Candidates (as defined in “Item
1A. Risk Factors”), which are still in development, and if none of them receive regulatory approval or
are successfully commercialized, our business may be harmed.
● COVID-19 has impacted and may continue to impact our business, and any other pandemic, epidemic or
outbreak of an infectious disease may materially and adversely impact our business, including our
preclinical studies, clinical trials, manufacturing capabilities and regulatory approvals.
● It is difficult to predict the time and cost of product candidate development on our novel gene therapy
platform. Very few gene therapies have been approved in the United States or in Europe.
● Because gene therapy is novel and the regulatory landscape that governs any product candidates we may
develop is uncertain and may change, we cannot predict the time and cost of obtaining regulatory
approval, if we receive it at all, for any product candidates we may develop.
● Clinical trials are expensive, time-consuming, difficult to design and implement, and involve an
uncertain outcome. Further, we may encounter substantial delays in our clinical trials.
● The affected populations for our product candidates may be smaller than we or third parties currently
project, which may affect the addressable markets for our product candidates.
● We and our contract manufacturers for plasmid are subject to significant regulation with respect to
manufacturing our products. Our manufacturing facilities and the third-party manufacturing facilities
which we rely on may not continue to meet regulatory requirements and have limited capacity.
● Enacted and future healthcare legislation may increase the difficulty and cost for us to obtain marketing
approval of and commercialize our product candidates and may affect the prices we may set.
● We are subject to government regulation and other legal obligations relating to privacy and data
protection. Compliance with these requirements is complex and costly. Failure to comply could
materially harm our business.
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● We face significant competition in an environment of rapid technological change, and there is a
possibility that our competitors may achieve regulatory approval before us or develop therapies that are
safer or more advanced or effective than ours, which may harm our financial condition and our ability to
successfully market or commercialize any product candidates we may develop.
● We depend on proprietary technology licensed from others. If we lose our existing licenses or are unable
to acquire or license additional proprietary rights from third parties, we may not be able to continue
developing our product candidates.
● If we are unable to obtain and maintain patent protection for our technology and product candidates or if
the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete
effectively in our markets.
● We may need to expand our organization, and we may experience difficulties in managing this growth,
which could disrupt our operations.
● Our future success depends on our ability to retain our key personnel and to attract, retain and motivate
qualified personnel.
BASIS OF PRESENTATION
Unless the context otherwise requires, references in this Form 10-K to “Meira,” “MeiraGTx,” “we,” “us”, “our” or “the
Company” refer to MeiraGTx Holdings plc and its subsidiaries.
We have proprietary rights to trademarks, trade names and service marks appearing in this Form 10-K that are important to
our business. Solely for convenience, the trademarks, trade names and service marks may appear in this Form 10-K
without the ® and TM symbols, but any such references are not intended to indicate, in any way, that we forgo or will not
assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks,
trade names and service marks. All trademarks, trade names and service marks appearing in this Form 10-K are the
property of their respective owners.
INDUSTRY AND OTHER DATA
We obtained the industry, market and competitive position data in this Form 10-K from our own internal estimates and
research as well as from industry and general publications and research, surveys and studies conducted by third parties.
Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable,
although they do not guarantee the accuracy or completeness of such information. While we believe that each of these
studies and publications is reliable, we have not independently verified market and industry data from third-party sources.
While we believe our internal company research as to such matters is reliable and the market definitions are appropriate,
neither such research nor these definitions have been verified by any independent source.
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ITEM 1. BUSINESS
Overview
PART I
We are a vertically integrated, clinical stage gene therapy company with six programs in clinical development and
a broad pipeline of preclinical and research programs. We have core capabilities in viral vector design and optimization
and gene therapy manufacturing, as well as a potentially transformative gene regulation platform technology that allows
precise, dose responsive control of gene expression by oral small molecules with dynamic range that can exceed 5000-fold.
Led by an experienced management team, we have taken a portfolio approach by licensing, acquiring and developing
technologies that give us depth across both product candidates and indications. The Company’s initial focus is on three
distinct areas of unmet medical need: ocular diseases, including both inherited retinal diseases as well as large degenerative
ocular diseases, neurodegenerative diseases and severe forms of xerostomia. Though initially focusing on the eye, central
nervous system and salivary gland, we intend to expand our focus in the future to develop additional gene therapy
treatments for patients suffering from a range of serious diseases.
We own and operate a flexible and scalable viral vector manufacturing facility in London, United Kingdom that
we expect can supply our current ophthalmology, neurodegenerative disease and salivary gland clinical and preclinical
programs through regulatory approval and, should they be approved, provide sufficient capacity for commercial
production. Completed in early 2018 and designed to meet global regulatory requirements, including the current good
manufacturing practices, or cGMP, required by the U.S. Food and Drug Administration, or FDA, our 29,000 square foot
facility has two cell production suites, three independent viral vector production suites providing multi-product and multi-
viral vector manufacturing capabilities and an integrated, flexible fill-and-finish suite. In May 2018, we were granted a
license to manufacture gene therapy product candidates in our cGMP compliant manufacturing facility by the United
Kingdom’s Medicines and Healthcare products Regulatory Agency, or MHRA. The MHRA re-certified the facility in the
second quarter of 2020.
We have expanded our manufacturing capabilities with our second, large scale cGMP viral vector manufacturing
facility and our first cGMP plasmid and DNA production facility in Shannon, Ireland. Coming online in 2022 and
stretching over 150,000 square feet, it is the first commercial-scale gene therapy manufacturing site in Ireland and is unique
in its scale and integrated capabilities. The site contains three facilities, one built to be flexible and scalable for viral vector
production for clinical and commercial supply, in addition, a facility to manufacture plasmid DNA – the critical starting
material for producing gene therapy products – and thirdly, a Quality Control (QC) hub performing advanced biochemical
quality control testing for MeiraGTx clinical and commercial programs. We completed the acquisition of the facilities in
January 2021. We believe the completion of our second viral vector manufacturing facility and bringing cGMP plasmid
and DNA production in-house will provide greater flexibility and efficiency as we advance our product candidates through
development, and should they be approved, commercial production.
We have also established a comprehensive platform for the efficient clinical development of the next generation of
gene therapies and manufacturing in accordance with cGMP. Our deep understanding of disease models informs our
development of potency assays for the cGMP production of our product candidates, and our teams experienced in viral
vector design and optimization work closely with our process development team to design viral vectors and develop
proprietary production cell lines for efficient scaling of manufacturing processes. Our wholly-owned facilities have now
produced GMP clinical trial material for six different indications, using multiple AAV serotypes, including administration
into the eye, salivary gland and central nervous system.
We are also developing a potentially transformative technology to precisely and specifically control gene therapy
expression levels via dose-response to orally delivered small molecules. The aim of this gene regulation platform
technology is to transform gene therapy into a generalizable delivery mechanism for biologic drugs using a
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small molecule “switch” for temporal control. We believe the capacity for temporal control of gene therapy products has
the potential to transform the gene therapy landscape by opening up new treatment possibilities.
Our Pipeline
Our initial focus is on three distinct areas of unmet medical need: ocular diseases, including inherited retinal
diseases, or IRDs, as well as large degenerative ocular diseases, severe forms of xerostomia and neurodegenerative
diseases. Utilizing our product development platform, we have assembled a pipeline of gene therapies to treat these serious
diseases. Our criteria for selecting our initial product candidates included:
● unmet medical need;
● high potential for meaningful clinical benefit;
● promising preclinical data using multiple animal models as well as human stem cell derived organoids;
● compartmentalized anatomy of target tissue and the partially immune protected nature of target tissue; and
● understanding of the disease state from natural history studies and detailed long-term characterization of
patients prior to entry into gene therapy treatment studies.
A summary of our product candidates and the status of such product candidates as of March 1, 2023 is described
below. We retain worldwide development and commercialization rights to all of our product candidates, with the exception
of AAV-CNGB3, AAV-CNGA3 and botaretigene sparoparvovec, formerly referred to as AAV-RPGR, which are subject to
a strategic Collaboration, Option and License Agreement (the “Collaboration Agreement”) that we executed with Janssen
Pharmaceuticals, Inc. (“Janssen”), one of the Janssen Pharmaceutical Companies of Johnson & Johnson, on January 30,
2019.
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In addition to these clinical and preclinical programs, we have preclinical and research programs in other
indications and novel molecular technologies that we aim to advance into clinical development, including:
● gene regulation—use of our proprietary RNA shape regulation cassette to switch gene therapy expression on
and off with small molecules, potentially transforming gene therapy technology into a delivery mechanism
for a broad array of biologic drugs;
● geographic atrophy age related macular degeneration, or dry AMD—use of gene therapy technology to
introduce light sensitive molecules into rod photoreceptors in order to restore some aspects of vision lost in
this disease;
● other ocular conditions—glaucoma and uveitis;
● Alzheimer’s disease—targeting endosomal trafficking, which is a central mechanism that we believe
underlies Alzheimer’s disease;
● central nervous systems/peripheral nervous system diseases—brain-derived neurotrophic factor gene therapy
for treatment of genetic obesity disorders, as well as the development of gene therapy product candidates for
other central nervous system diseases; and
● inflammatory/autoimmune diseases—use of gene therapy technology for the local delivery of
immunomodulatory therapeutics, including osteoarthritis, gout and certain rare inflammatory disorders.
Our Ophthalmology Programs
Eye diseases are our first area of clinical focus and we aim to provide treatments with durable, long-term clinical
benefit that will halt vision loss in patients. We are actively dosing patients in our Phase 3 Lumeos clinical trial for
botaretigene sparoparvovec for the treatment of X-linked retinitis pigmentosa related to mutations in the RPGR gene, or
XLRP-RPGR. We also have three Phase 1/2 clinical programs targeting IRDs, including AAV-CNGB3 and AAV-CNGA3
for the treatment of achromatopsia, or ACHM, related to mutations in CNGB3 and CNGA3 genes, respectively, and AAV-
RPE65 for retinal dystrophy related to mutations in the RPE65 gene, or RPE65 deficiency. We have completed enrollment
and dosing in all three of these programs. In addition to these four programs, AAV-AIPL1 has been manufactured and
released for compassionate use under an MHRA specials license in the United Kingdom, or UK, to treat patients with
Leber congenital amaurosis 4, or LCA4, caused by mutations in the AIPL1 gene. In addition to these clinical programs in
IRDs, we have preclinical programs that apply novel approaches to both wet and dry AMD, glaucoma and uveitis, as well
as several other IRDs including retinol dehydrogenase 12, or RDH12, mutation-associated retinal dystrophy.
We chose diseases of the eye as our first area of clinical focus because we believe the eye is ideally suited for gene
therapy for the following reasons.
● The eye is easily accessible and has highly compartmentalized anatomy, which allows for accurate delivery
of vectors to specific tissues using direct visualization and microsurgical techniques.
● The structure of the eye allows for efficient delivery to specific cell subtypes with small volumes of vector,
making the dose per patient much lower than is needed for systemic treatment.
● Anatomical barriers and unique structure of the eye make the immune response to the intraocular
administration of vectors more attenuated than systemic administration.
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● Largely non-dividing cell populations in the eye make good targets for potentially stable, long-term gene
delivery and expression.
● The retina, a structure in the back of the eye, is visible and there are many well validated structural and
functional readouts allowing the detailed assessment of the therapeutic impact of the gene therapy treatment.
Our strategy for developing gene therapies targeting eye diseases is to begin with a number of monogenic IRDs
that are good candidates for gene replacement therapies and expand to more common eye diseases over time. We have
taken a portfolio approach to the development of IRDs because, while some of these genetic defects are rare, IRDs as a
class are one of the most common causes of blindness in working age adults and there are multiple synergies at the clinical,
regulatory and commercial levels between many of these diseases caused by different gene mutations.
The deep scientific and clinical understanding of IRDs driving our approach to gene therapy development helps us
to optimize our product candidates for each specific genetic mutation and phenotype. We develop our viral vectors by
selecting and modifying proprietary cell specific promoters, selecting appropriate capsids for transfection of target cells
and refining the vector for efficient production and scalable manufacturing. Not only does this allow us to synergistically
target a portfolio of inherited eye conditions, we also believe it has potential to be applied to the development of gene
therapies for other diseases.
Our longstanding relationships with leading institutions in retinal disease treatment, including the Moorfields Eye
Hospital in London, the University of Michigan Kellogg Eye Center, Massachusetts Eye and Ear, the Medical College of
Wisconsin & Froedtert Hospital and the Casey Eye Institute at the Oregon Health & Science University, provide us with
access to experts whose guidance and insight informs our development strategy, as well potential patients for our clinical
trials.
We intend to leverage our platform to take advantage of the many synergies across our ophthalmology programs,
including identification, diagnosis and characterization of patients, specialized surgical techniques, clinical and regulatory
process, vector production and cGMP manufacturing.
Botaretigene Sparoparvovec for the Treatment of X-Linked Retinitis Pigmentosa Associated with Mutations in the
RPGR Gene
Retinitis pigmentosa, or RP, is a group of IRDs which represent the most common genetic cause of blindness. The
condition is characterized by progressive retinal degeneration and vision loss that ends in complete blindness. RP initially
presents as nighttime blindness during childhood or early adulthood, progressing to peripheral visual field loss and “tunnel
vision,” central visual impairment, reduced visual acuity and, ultimately, complete blindness.
RP may be caused by mutations in any of over 100 different genes. The most severe forms of RP are X-linked, or
XLRP, with onset in early childhood and rapid progression to blindness generally by the time patients reach 30 to 40 years
old. The most frequent mutation causing XLRP is in the retinitis pigmentosa GTPase regulator gene, or RPGR. XLRP
associated with a mutation in RPGR, or XLRP-RPGR, accounts for more than 70% of cases of XLRP. There are estimated
to be approximately 20,000 XLRP-RPGR patients in the United States (U.S.), Japan and Germany, France, Spain, Italy and
the UK, or the EU5, with a little less than 50% of those patients being under the age of 40 and approximately 200 new
cases being diagnosed annually. We believe the availability of a therapeutic option may increase patient identification and
the estimated prevalence of XLRP-RPGR.
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There are currently no approved treatments for XLRP.
Clinical Development of Botaretigene Sparoparvovec
We have an ongoing natural history study in XLRP-RPGR including approximately 100 patients, which allows us
to collect structural and functional data for up to five years on prospectively defined endpoints, including functional tests,
retinal imaging and electrophysiological assessments. We believe access to this large population of XLRP-RPGR patients
has enabled us to efficiently enroll appropriate patients into our XLRP clinical development program.
Since XLRP-RPGR is a progressive disease in which the retina gradually degenerates starting in the outer, or
peripheral, regions of the retina and initially causing “tunnel vision” with final degeneration of the central retina resulting
in the complete loss of visual acuity and blindness that generally occurs by the time patients are 30 to 40 years old, we
believe that the central region of the retina, including the macula and fovea, must be preserved to prevent the ultimate
degeneration to blindness and to retain visual acuity. To this end, we aim to deliver botaretigene sparoparvovec to this
central region of the retina.
We conducted a Phase 1/2 clinical trial of botaretigene sparoparvovec in XLRP patients. Botaretigene
sparoparvovec was delivered via subretinal injection of up to 1mL with the potential for the surgeon to use multiple
retinotomies targeting the region of the central retina, including the macula and fovea.
In the dose escalation portion of the Phase 1/2 trial, we enrolled 13 patients, including 10 young adults and 3
children. After we completed dosing patients in the dose escalation portion of the study, we enrolled patients in the
randomized, controlled, extension portion of the Phase 1/2 trial. We disclosed six-month data from the dose escalation
portion of the study as a late-breaker at the American Society of Retina Specialists 2020 Virtual Annual Meeting in July
2020, nine-month data at EURETINA 2020 Virtual Congress in October 2020 and twelve-month data at the American
Academy of Ophthalmology, or AAO, 2020 Virtual Annual Meeting in November 2020. Data from each time point
revealed that patients treated with low (n=3) and intermediate (n=4) dose botaretigene sparoparvovec experienced
statistically significant improvement in retinal sensitivity. Nine-month data also indicated significant improvement in
vision-guided mobility, and at 12-months, six of seven patients continued to show improved or stable vision in the treated
eye. Each patient was treated with subretinal delivery of botaretigene sparoparvovec in one eye and the patient’s other eye
served as an untreated control. The primary endpoint of the trial is safety, with secondary endpoints assessing changes in
visual function at pre-specified timepoints post-treatment. Baseline values were determined in triplicate.
We disclosed additional twelve-month clinical data from the dose escalation portion of the Phase 1/2 trial as part
of an oral presentation at the EURETINA 2021 Virtual Congress in September 2021. The retinal function of ten adult
males aged 18-30 years with RPGR-associated XLRP was assessed twelve months post-treatment. For the intermediate
dose-escalation dose cohort (n=4), intervention with botaretigene sparoparvovec in the poorer-seeing eye altered the course
of natural disease progression. At twelve months post-intervention, mean retinal sensitivity (MS) and volumetric analysis
of the central 30 degrees of the retinal field (V30) in the treated eye were similar to levels observed twenty-four months
pre-intervention, while the untreated eye showed a continued downward trajectory.
We also disclosed positive data from the Phase 1/2 clinical trial at the AAO 2022 Annual Meeting in October
2022. Treatment with botaretigene sparoparvovec was found to be generally safe and well-tolerated, with no dose-limiting
events. Adverse events profile was anticipated and manageable, with most adverse events related to the surgical delivery
procedure, transient and resolved without intervention. A total of three serious adverse events were observed in the overall
Phase 1/2 clinical study; two serious adverse events, which were previously reported, were observed in the dose-escalation
phase of the study (n=10; one retinal detachment and one panuveitis in the low dose cohort), and a single additional serious
adverse event of increased intraocular pressure was observed in the dose escalation phase and resolved with treatment.
Sustained or increased functional improvements were demonstrated at six months post-treatment in multiple endpoints
across each of the three domains of vision -- retinal function, visual function, and functional vision --
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in patients treated with botaretigene sparoparvovec when compared to the randomized untreated control arm of the study.
We are actively dosing patients in our Phase 3 Lumeos clinical trial, a randomized, controlled study of
botaretigene sparoparvovec for the treatment of XLRP associated with variants in the RPGR gene.
The FDA has granted Fast Track and orphan drug designations to botaretigene sparoparvovec. Competent
authorities in the European Union, or EU, have granted Priority Medicines, or PRIME, advanced therapy medicinal
product, or ATMP, and orphan drug designations to botaretigene sparoparvovec.
AAV-RPE65 for the Treatment of RPE65-Associated Retinal Dystrophy
We are developing AAV-RPE65 for the treatment of retinal dystrophy associated with mutations in the RPE65
gene. RPE65-associated retinal dystrophy causes rod photoreceptor dysfunction and impaired vision from birth. Absence
of RPE65 results in severe dysfunction of rods and causes impaired vision in dim lighting conditions. Although cone
photoreceptors are generally preserved during childhood in RPE65-deficient patients, the lack of function and degeneration
of the rods eventually results in the loss of cones and degeneration of the whole retina over time. Consequently, most
RPE65-associated retinal dystrophy patients experience central vision loss progressing to complete blindness by early
adulthood.
Based on an estimated prevalence of approximately one in 500,000 people in the United States suffering from
Leber congenital amaurosis, or LCA, related to mutations in the RPE65 gene, and approximately one in 70,000 people in
the United States having RP due to mutations in the RPE65 gene, RPE65-deficiency occurs in approximately one in
125,000 people in the United States. There are estimated to be approximately 6,000 RPE65-deficiency patients in the
United States, Japan and EU5, with almost 30% of those patients being under the age of 30 and approximately 50 new
cases being diagnosed annually. We have developed a gene therapy candidate optimized for safety and potency for the
treatment of RPE65-associated retinal dystrophy, AAV-RPE65. AAV-RPE65 is an AAV2/5 viral vector, in which a codon
optimized RPE65 gene is driven by a novel synthetic retinal pigment epithelium cell specific promoter.
The FDA has approved the first gene treatment for RPE65-associated retinal dystrophy, Luxturna, a commercially
available product developed by Spark Therapeutics, Inc., which was purchased by Roche. While RPE65-associated retinal
dystrophy primarily causes a loss of rod function initially leading to impaired vision in dim light, these patients ultimately
experience complete blindness because of degeneration of the cone rich fovea. To prevent blindness, therefore, we believe
it is critical to treat the central retina in order to maintain structural integrity in this region and save central vision. We aim
to treat as extensive an area of the central retina as possible, including the cone rich fovea. Thus, in addition to improving
rod function, we aim to provide sufficient RPE65 protein to the cells in the central retina to prevent the degeneration of
both rods and cones in this region, and thereby prevent the progression to complete blindness.
Clinical Development of AAV-RPE65
We have an ongoing natural history study in patients with RPE65-associated retinal dystrophy with approximately
30 patients enrolled that allows us to collect structural and functional data on prospectively defined endpoints, including
functional tests, retinal imaging, and electrophysiological assessments.
Our Phase 1/2 clinical trial enrolled RPE65-associated retinal dystrophy patients in the UK and U.S. Dosing in
the Phase 1/2 clinical trial was completed in June 2018. The primary endpoint of this open-label, dose-escalation clinical
trial is safety. Secondary endpoints include the outcomes of a range of functional tests, detailed structural analysis of the
retina and quality of life measures. A total of 15 patients were treated in this clinical trial, including nine adult patients in
three dose escalation cohorts and six pediatric patients in the pediatric extension arm of the trial.
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In May 2019, we announced positive topline safety and efficacy data from the Phase 1/2 trial of AAV-RPE65.
Additional data from this study were presented at the Retina Subspecialty Day of the American Academy of
Ophthalmology Annual Meeting in October 2019.
AAV-RPE65 met the study’s primary endpoint of safety and tolerability. Additionally, AAV-RPE65 demonstrated
statistically significant improvement across several secondary endpoints assessing clinical activity. Significant
improvement in vision was demonstrated at six months after AAV-RPE65 treatment, as measured by assessments of vision-
guided mobility, retinal sensitivity, visual acuity and contrast sensitivity. Larger improvements from baseline in functional
vision were observed between treated and control eyes at lower light levels. We believe these outcomes address the core
functional manifestation of RPE65-associated retinal dystrophy, which typically causes vision impairment beginning in
early childhood that is most pronounced in low-light conditions, and is consistent with the proposed mechanism of action
of AAV-RPE65.
We continue to evaluate the initiation of a Phase 3 clinical trial for AAV-RPE65.
The FDA and European Medicines Agency, or EMA, each granted orphan status to AAV-RPE65 for the treatment
of LCA caused by mutations in the RPE65 gene. The FDA also granted AAV-RPE65 rare pediatric disease designation for
the treatment of inherited retinal dystrophy due to biallelic RPE65 mutations.
AAV-CNGB3 and AAV-CNGA3 for the Treatment of Achromatopsia
Achromatopsia, or ACHM, is an IRD that specifically prevents cone photoreceptors from functioning. ACHM
patients are legally blind from birth and usually suffer from severely reduced visual acuity of 20/200 or worse, a disabling
sensitivity to light, or photoaversion, total color blindness and involuntary back and forth eye movements, or nystagmus.
ACHM patients suffer significant vision loss due to the complete lack of cone function. ACHM occurs in approximately
one in 30,000 people in the United States. The CNGB3 and CNGA3 genes are the two most common genes that have been
identified as causing ACHM, together accounting for up to 92% of ACHM cases, with CNGB3 slightly more common than
CNGA3 in most geographic territories.
There are estimated to be approximately 12,000 patients with ACHM caused by mutations in CNGB3 in the
United States, Japan, and the EU5, with about 25% of those patients being under the age of 18 and approximately 125 new
cases being diagnosed annually. We believe the availability of a therapeutic option may increase patient identification and
the estimated prevalence of ACHM.
ACHM is predominantly a stationary disease, which means that ACHM patients’ retinas contain non-functioning
cones that survive intact for many decades. This is in contrast to many IRDs in which the entire retina slowly degenerates
over a patient’s life. This extended survival of cones with their potential for light sensitivity presents a wide window of
opportunity to introduce a normal copy of the mutated gene via a gene therapy product candidate and thereby restore cone
function. While the stationary nature of ACHM means that cones remain present for decades, the functional connections
between active cones and the visual cortex in the brain are thought to become fixed in teenage years. Therefore, we
believe that younger individuals are likely to benefit most from gene therapy treatment for ACHM because of their greater
visual plasticity. Another debilitating symptom of ACHM, which lasts throughout life, is photoaversion. A disabling and
ubiquitous symptom of ACHM, photoaversion is the avoidance of light due to discomfort in the presence of levels of light
equivalent to a normally lit room or daylight. ACHM patients often avoid light and wear dark glasses, which further
diminishes their already very poor vision. We believe it is possible that restoration of cone function in adult patients might
have an impact on photoaversion even if brain plasticity is limited.
We believe that gene therapy treatment for ACHM in which we aim to restore cone function via a gene
replacement strategy may offer benefits across a range of ages, which we aim to define in our clinical development
programs.
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We have designed specifically optimized gene therapy viral vector candidates to treat ACHM caused by mutations
in each of CNGB3 and CNGA3, with which we aim to address the majority of patients suffering from ACHM. Our product
candidates are delivered via subretinal injection covering the central macula region of the eye, where most of the cones in
the retina are located.
We have an ongoing natural history study in ACHM including over 90 patients that allows us to collect structural
and functional data for up to five years on prospectively defined endpoints, including functional tests, retinal imaging and
electrophysiological assessments. We believe access to these ACHM patients has enabled us to efficiently enroll the most
appropriate patients into our CNGB3 and CNGA3 Phase 1/2 clinical trials. In addition to giving us access to patients and
potentially accelerated enrollment in our treatment studies, we believe the prospective natural history data on each treated
patient allow us to gather robust data from our Phase 1/2 clinical trials in a condensed timeframe.
Clinical Development of AAV-CNGB3 for the Treatment of ACHM Caused by Mutations in the CNGB3 Gene
We have developed a product candidate, AAV-CNGB3, to treat ACHM caused by mutations in the CNGB3 gene.
Mutations in the CNGB3 gene prevent cone photoreceptors from functioning because CNGB3’s gene product is integral to
the formation of a specific membrane channel that enables cones’ electrical response to light. CNGB3 is a gene exclusively
expressed in cones and our aim is to replace the absent function of the mutant CNGB3 gene with a normal copy of the gene
in cones of IRD patients and thereby restore cone function. In order to drive expression of the functional CNGB3 gene
specifically in cones and not in other cells of the retina, we use the cone specific human cone arrestin, or CAR, promoter to
drive the expression of a codon optimized CNGB3 cDNA. Codon optimization improves protein expression by increasing
translation efficiency. To transfect cone photoreceptors, we use the AAV8 capsid, which enables the efficient delivery of
the CNGB3 gene cargo to those photoreceptors. As the vast majority of the cones in the eye are located centrally and
concentrated in the macula, we treat this central region of the retina through subretinal injection to deliver the viral vector
product candidate to the photoreceptors in which its activity is required.
We have completed enrollment and dosing of the Phase 1/2 clinical trial of AAV-CNGB3 in both adult and
pediatric patients. In this trial, AAV-CNGB3 was delivered via subretinal injection of up to 0.5mL targeting the central
region of the retina, including the macula and fovea, where most of the cones are located. One eye is treated in each
patient. The primary endpoint of this open-label, dose-escalation clinical trial is safety. Secondary endpoints include the
outcomes of a range of functional and structural assessments.
Dosing was completed in this clinical trial in May 2019. In the dose escalation portion of the trial, we treated 11
adults. We also treated 12 children in the pediatric expansion cohorts. Six months following treatment, patients can move
onto a long term follow up study in which they are followed for safety and indication of benefit for an additional four and a
half years.
Our gene therapy product candidate AAV-CNGB3 was granted orphan drug designation by the FDA and the
European Commission for the treatment of achromatopsia caused by mutations in the CNGB3 gene, rare pediatric disease
designation by the FDA for the treatment of achromatopsia caused by mutations in the CNGB3 gene, and Fast Track
designation by the FDA for the treatment of achromatopsia caused by CNGB3 mutations. We were granted PRIME
designation by the EMA in October 2018 based on data from the first adult treatment cohort along with preclinical data.
Clinical Development of AAV-CNGA3 for the Treatment of ACHM Caused by Mutations in the CNGA3 Gene
We are also developing AAV-CNGA3 to treat ACHM caused by mutations in the CNGA3 gene. We have
designed a synthetic promoter to drive high levels of CNGA3 expression specifically in cones because we believe a larger
amount of CNGA3 protein is required to restore cone function as compared to CNGB3. AAV-CNGA3 utilizes this
proprietary pan cone promoter to drive a codon optimized CNGA3 gene sequence. We believe this novel promoter can
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drive sufficient expression of CNGA3 in cones to restore light sensitivity to these cones in CNGA3 deficient patients. We
use the AAV8 capsid to transfect cone photoreceptors in the back of the eye and we target the cones concentrated in the
central region of the retina via a subretinal injection that covers the macula.
We have completed enrollment and dosing of the open-label, dose-escalation Phase 1/2 clinical trial of AAV-
CNGA3 in patients with ACHM due to mutations in the CNGA3 gene.
Our gene therapy product candidate AAV-CNGA3 was granted orphan drug designation by the FDA and EMA,
rare pediatric disease designation by the FDA, and in January 2021, was granted Fast Track designation by the FDA for the
treatment of ACHM caused by CNGA3 mutations.
AAV-AIPL1 for the Treatment of LCA4
LCA4 is an IRD that causes complete blindness before age five. AIPL1 is a central protein for the maintenance of
photoreceptor structure and function. Deletion of the AIPL1 gene causes the most severe form of early retinal dystrophy,
LCA4, in which the retinal structure is destroyed with complete vision loss. LCA4 is rare, representing approximately 8%
of all LCA cases.
There are currently no approved treatments for LCA4, and we believe an effective intervention will require
introducing a normal functional copy of the AIPL1 gene into rod and cone photoreceptors early in a patient’s life while
some retinal structure remains in order to activate function and survival of the photoreceptors that are still present. We
believe gene therapy has the potential to be the only effective way to address the disease’s root cause.
LCA4’s extremely rapid progression, rarity and early age of onset make the standard process of seeking regulatory
approval through clinical development challenging because adult safety trials would not yield meaningful data given the
early onset of the disease.
To address LCA4, we developed a viral vector to replace the AIPL1 gene in all photoreceptors by using the AIPL1
cDNA driven by the rhodopsin kinase promoter, which is active in both rods and cones.
We have manufactured and released AAV-AIPL1 for compassionate use under an MHRA specials license in the
UK to treat LCA4 patients. A specials license allows physicians to prescribe a treatment of AAV-AIPL1 for LCA4 patients
they deem appropriate. We play no role in the physician’s treatment decision. We intend to use any data produced by the
compassionate use treatment to inform any potential clinical development plan as well as any interactions with the
regulatory agencies that would enable us to make this intervention more widely available to the LCA4 patient population.
As the manufacturer of AAV-AIPL1 under a specials license, we have a record retention requirement and a
continuing obligation to inform the MHRA of any suspected adverse reaction to our medicinal product which is a serious
adverse reaction.
The UK’s Human Medicines Regulations 2012 allow for the manufacture and supply of medicinal products not
authorized for marketing to patients with special needs at the request of the healthcare professional responsible for the
patient’s care (these products are referred to as “specials”). A special may only be supplied in: (i) response to an
unsolicited order from a healthcare professional responsible for the care of the patient, (ii) if the product is manufactured
and assembled in accordance with the specifications of that healthcare professional to fulfil the special needs of the
individual patient that cannot be met by products already authorized for marketing and (iii) if the product is manufactured
under a specials license granted by the MHRA.
Manufacturing a special also imposes a five year record retention requirement subject to review by the MHRA,
including details of any suspected adverse reaction to the product so sold or supplied of which the person is aware or
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subsequently becomes aware, as well as a continuing obligation to notify the MHRA of any suspected adverse reaction to
the medicinal product which is a serious adverse reaction.
The FDA and European Commission granted orphan designation to AAV-AIPL1 for treatment of inherited retina
dystrophy due to defects in AIPL1 gene.
Ophthalmology Preclinical Development Pipeline
We also have a preclinical IRD development pipeline focused on diseases caused by mutations in additional
genes. In order to expand our gene therapy pipeline for retinal diseases, we are also developing treatments for certain
multifactorial eye diseases, which are diseases caused by multiple genetic or environmental factors.
AAV-RDH12 for the Treatment of RDH12 Mutation-Associated Retinal Dystrophy
Disease-causing sequence variants in RDH12 cause severe retinal dystrophy most often resulting in the clinical
diagnosis of Leber congenital amaurosis (LCA) and early onset severe retinal dystrophy (EOSRD); although RDH12
variants have also been associated with a clinical diagnosis of RP. Sequence variants in RDH12 account for 3.4%–10.5%
of LCA/EOSRD. Individuals with RDH12 deficiency exhibit widespread retinal degeneration impacting both rods and
cones, with early macular involvement. Most people with RDH12–LCA/EOSRD experience marked central visual loss by
their late teens to twenties. AAV-RDH12 is an AAV based gene therapy designed to deliver a functional copy of the
RDH12 gene to the retina of patients with genetically defined RDH12 deficiency.
We received orphan drug designation from the FDA as well as orphan medicinal product designation from the
European Commission for AAV-RDH12 for the treatment of RDH12-associated retinal dystrophy.
We currently have an ongoing natural history study for patients with RDH12 mutation-associated retinal
dystrophy. This will allow us to collect structural and functional data for up to five years on prospectively defined
endpoints including functional tests, retinal imaging and electrophysiological assessments. We believe access to these
patients and their data will enable us to efficiently enroll the most appropriate patients into a clinical trial for AAV-RDH12.
Wet and Dry Neovascular Age Related Macular Degeneration (AMD)
We are developing pre-clinical programs relating to neovascular age related macular degeneration, or wet AMD.
We use a gene therapy product to deliver an antibody targeting the vascular endothelial growth factor receptor 2, or anti-
VEGFR2, with the aim of blocking disease related vascular formation in the eye.
Additionally, we are developing a novel approach to treat advanced dry AMD patients who have lost central
vision through our innovative “rod-to-cone” technology. By genetically engineering rods with molecules that will improve
their speed of response to light, we aim to effectively transform a patch of rod photoreceptors in the outer part of the retina
to behave more like cone photoreceptors, thus improving vision. There is no currently approved therapy that impacts
disease progression of dry AMD. The best available treatment for patients after they lose central vision and acuity is
support and rehabilitation services to help them better utilize the remaining peripheral part of their retina.
Our Salivary Gland Programs
Our second area of clinical focus is xerostomia, a chronic and debilitating disorder of the salivary glands in which
saliva production is impaired. Xerostomia may be caused by a number of different insults to the salivary glands, including
radiation therapy for head and neck cancer and certain autoimmune diseases.
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AAV-hAQP1 for the Treatment of Radiation-Induced Grade 2/3 Xerostomia
Radiation-induced xerostomia, or RIX, is a severe and debilitating long-term side effect of radiation treatment for
head and neck cancer. Chronic RIX results in severe side effects, including difficulty swallowing, or dysphagia, oral
discomfort, malnutrition, oral mucositis, changes in taste, increased oral infections and dental cavities, resulting in a
significant negative impact on patient quality of life. Current treatment options for RIX are few and are of limited benefit.
The sialogogues pilocarpine (approved for RIX) and cevimeline (used off-label) are minimally effective in patients with
grade 2/3 RIX where the gland structure and function have been significantly impaired. No new medications for RIX have
been approved in over 20 years.
Worldwide, there are approximately 650,000 new cases of head and neck cancer diagnosed each year, with
approximately 54,000 cases in the U.S. alone, making it the fifth most common malignancy. Approximately 85% of
patients who receive radiation treatment for head and neck cancer experience reduced saliva production during treatment,
and approximately 50% of those patients who remain cancer free for two or more years after treatment continue to suffer
from grade 2 or 3 RIX. There are approximately 170,000 such patients in the U.S., with approximately 5,000 to 10,000
new cases each year in the U.S.
Salivary glands are an attractive target organ for gene therapy treatments because they are self-contained, partially
immune protected and easily accessible, allowing for non-invasive delivery of small vector doses.
We are developing AAV-hAQP1 to treat RIX by increasing water conduction in the chronically damaged salivary
glands by introducing a water conducting channel into the remaining epithelial cells of these damaged glands. Adequate
water secretion by surviving epithelial cells has the potential to deliver the protective exocrine proteins produced by
remaining gland cells into the mouth.
The key to our approach is that, unlike the water conducting acinar cells, the water impermeable duct cells of the
glands appear to be resilient to infrared radiation exposure. As a consequence of this relative resilience to radiation
treatment, salivary glands damaged by radiation treatment tend to contain mostly water impermeable ductal epithelial cells.
To make these duct cells permeable to water, AAV-hAQP1 introduces the gene for the human aquaporin water channel, or
hAQP1. We have demonstrated that this has the potential to convey water permeability and causes ductal cells to generate
an osmotic gradient, which causes them to secrete fluid into the lumen of the duct.
The proof of concept for this mechanism and its ability to increase the volume of saliva secreted by damaged
salivary glands was observed in a Phase 1 clinical trial conducted by the NIH in patients with chronic grade 2 or 3 RIX.
The trial was designed as a short-term dose escalation trial of a gene therapy using adenovirus as the vector to deliver the
hAQP1 to the remaining epithelial cells in the parotid gland of 11 patients suffering from chronic RIX. There were no
reported severe adverse events among the patients treated, two out of three patients in each of the first three cohorts in this
clinical trial were observed to have objective increases in saliva volume produced by the treated parotid gland, with
increases in parotid flow ranging from 60% to 540%, and all but one of these patients showed a decrease in symptoms of
dry mouth as measured by subjective visual analog scales, validated in other forms of xerostomia. The results of this study
were published in Proceedings of the National Academy of Sciences in 2012.
We are currently conducting a Phase 1 dose escalation clinical trial of AAV-hAQP1 at the NIH in patients with
grade 2 or 3 RIX who remain cancer free for at least five years after receiving radiation treatment. In this trial we are using
AAV2 to deliver the hAQP1 gene, as we believe AAV2 efficiently transfects the salivary gland cells and does not spread
beyond the target cells. The aim of the trial is to determine the safety of inserting hAQP1 locally into the salivary glands of
RIX patients, as well as to measure changes in salivary flow resulting from the introduction of this channel. This clinical
trial is being conducted in conjunction with the National Institute of Dental and Craniofacial Research at the United States
National Institutes of Health, or the NIH, Dental Clinic.
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In the third quarter of 2019, we also initiated an open-label, multi-center Phase 1 dose escalation clinical trial of a
single administration of our product candidate AAV-hAQP1 to one or both parotid glands in patients with grade 2 or 3 RIX.
In December 2021, we announced preliminary data from this Phase 1 clinical trial. The announcement included data from
seven patients treated in cohorts 1, 2 and 3 of the unilateral dose escalation phase of the clinical trial. Six of the seven
patients who reached 90 days following treatment reported their symptoms of dry mouth as better following treatment
pursuant to a validated patient reported assessment of xerostomia symptoms, constituting clinically meaningful
improvement. One patient who reported the maximum response evaluable at 12-months had reached the 24-month time
point and reported the same level of response. In March 2022, we completed enrollment of the study. A total of 24
patients received either unilateral (n=12) or bilateral (n=12) treatment in one of eight escalating dose cohorts of three
patients each.
In December 2022, we announced additional positive clinical data from the Phase 1 dose escalation clinical trial
of AAV-hAQP1. As of the cutoff date of November 30, 2022, all 12 unilaterally treated participants had undergone their
12-month assessment, with three having completed their 24-month assessment and one having completed their 36-month
assessment in the long-term follow-up study. All 12 bilaterally treated participants had undergone their 6-month
assessment. The investigational gene therapy AAV-hAQP1 has been well tolerated with no dose limiting toxicity or
treatment-related serious adverse events, and improvements have been seen in validated patient reported assessments of
xerostomia symptoms and in whole salivary flow rate. All subjects are to be followed for one year post-treatment in the
present study and for an additional four years in the long-term follow-up study, per FDA guidelines. The study’s primary
endpoint is safety. Secondary endpoints include change from baseline in patient reported measures of xerostomia
symptoms as well as whole salivary flow rates.
Based on the safety and efficacy profile of AAV-hAQP1 in the Phase 1 clinical trial and regulatory precedent, we
intend to initiate a randomized, double-blind, placebo-controlled Phase 2 study evaluating two active doses of AAV-hAQP1
for the treatment of grade 2 or 3 RIX in the first half of 2023.
The FDA granted orphan drug designation to AAV-hAQP1 for the treatment of symptoms of grade 2 and grade 3
late xerostomia from parotid gland hypofunction caused by radiotherapy for cancer of the oral cavity.
AAV-hAQP1 for the Treatment of Sjogren’s Syndrome
The destruction of salivary tissue resulting in chronic xerostomia may also be caused by chronic autoimmune
disease. Sjogren’s syndrome is an autoimmune disease in which a patient’s immune system may target the salivary glands.
Chronic inflammation of the salivary glands results in long term damage and chronic xerostomia in many Sjogren’s
patients. Data from preclinical studies in animal models of Sjogren’s syndrome and data from explants of minor salivary
glands of Sjogren’s patients suggest that Sjogren’s syndrome may also be treatable with our AAV-hAQP1 vector.
Supported by data from our preclinical studies and our ongoing RIX clinical trials, we are currently conducting IND-
enabling studies of AAV-hAQP1 for xerostomia caused by Sjogren’s syndrome.
Our Neurodegenerative Disease Programs
Neurodegenerative diseases are our third area of focus. Relying on our expertise in viral vector design, delivery,
production and manufacturing, we are aiming to develop and optimize vectors to effectively treat both genetic and sporadic
forms of these diseases.
AAV-GAD for the Treatment of Parkinson’s Disease
Our first target indication is Parkinson’s disease, where we have Phase 2 clinical data from a successful
randomized, double-blind, sham-controlled trial.
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Affecting nearly one million Americans and 10 million worldwide, Parkinson’s disease is the second-most
common neurodegenerative disease after Alzheimer’s disease and is the 14th-leading cause of death in the United States. It
is associated with a progressive loss of motor control (e.g., shaking or tremor at rest and lack of facial expression), as well
as non-motor symptoms (e.g., depression and anxiety). There is no cure for Parkinson’s disease and 60,000 new cases are
diagnosed each year in the United States alone.
Our product candidate targeting Parkinson’s disease, AAV-GAD, is designed to deliver the glutamic acid
decarboxylase, or GAD, gene to the subthalamic nucleus in order to increase production of GABA, the primary inhibitory
neurotransmitter in the human brain. GAD is the rate-limiting enzyme in the synthesis of GABA, therefore we believe that
increasing subthalamic nucleus GAD expression through gene therapy has the potential to address the dysregulation of
motor circuits and improve symptoms in Parkinson’s disease patients without affecting other brain regions, which can be
responsible for complications of existing therapies.
Clinical Development of AAV-GAD
In a blinded Phase 2 clinical trial of AAV-GAD in patients with medically refractory Parkinson’s disease, 45
patients were randomized 1:1 to receive either AAV-GAD gene therapy delivered by injection into the subthalamic nucleus
on both sides of the brain or bilateral sham surgery. Subjects were followed for one year and all results remained blinded
until the final treated patient reached the 6-month primary endpoint. The trial met the primary endpoint, of six-month
change from baseline in double-blind assessment of off-medication motor scores of the Unified Parkinson’s Disease Rating
Scale, or UPDRS. At the six-month endpoint, UPDRS score for the AAV-GAD group decreased by 8.1 points (SD 1.7,
23.1%; p<0.0001) and by 4.7 points in the sham group (1.5, 12.7%; p=0.003). The AAV-GAD group showed a
significantly greater improvement from baseline in UPDRS scores compared with the sham group over the six-month
course of the study (RMANOVA, p=0.04). An improvement in complications of medical therapy as measured by the
UPDRS part 4 was observed in the AAV-GAD group at both six and 12 months. A significant decline in duration of
disabling dyskinesia was observed only in the AAV-GAD treated patients.
AAV-GAD was reported to be well-tolerated, with no significant adverse events related to the therapy and no
speech or cognitive complications observed. The results of the trial were published in the March 2011 issue of The Lancet
Neurology, the August 2014 issue of the Journal of Clinical Investigation and the April 2017 issue of JCI Insight, building
upon publications of the Phase 1 trial data in The Lancet and the Proceedings of the National Academy of Sciences. In
addition, in research published in the November 28, 2018 issue of Science Translational Medicine, fifteen patients treated
with AAV-GAD gene therapy were observed to have expressed a treatment-related reorganization of functional brain
connectivity that was related to disease symptom improvement. These flurodeoxyglucose positron emission tomography
analyses provided objective biological evidence of improvements in abnormal brain networks associated with Parkinson’s
disease following AAV-GAD gene therapy.
These results were observed in patients treated in both Phase 1 and Phase 2 studies. Blinded analyses showed
significant improvements in abnormal thalamic metabolism, a key node in the movement circuitry, in the AAV-GAD
treated patients. This pattern of brain network activity was not seen in untreated hemispheres or patients in the sham arm.
Furthermore, a specific pattern of brain network activity was identified in those subjects with clinical improvements in the
sham arm, which was different from the pattern observed in AAV-GAD responders.
We filed an Investigational New Drug application (IND) for AAV-GAD in May 2022, and we are now dosing
patients in an AAV-GAD Phase 1 study with material that has been manufactured with our in-house proprietary
manufacturing process at our cGMP manufacturing facility in London. The objective of the AAV-GAD trial is to evaluate
the safety and tolerability of delivery of AAV-GAD into the subthalamic nuclei of participants with Parkinson’s disease.
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Neurodegenerative Disease Preclinical Development Pipeline
In addition to our clinical stage Parkinson’s disease program, we continue to conduct research to develop our
preclinical pipeline of gene therapy product candidates for the treatment of other serious diseases of the central nervous
system, including AAV-UPF1 to address motor neuron death in ALS, and an Alzheimer’s disease program focused on
endosomal trafficking dysfunction. Each of these programs are directed towards the underlying cell biology that may be
driving neurogeneration in these diseases.
ALS
ALS is a devastating, progressive, neurodegenerative disease leading to the loss of motor neurons, which are the
neurons that control the ability to move, speak, swallow and ultimately to breathe. The gradual paralysis in ALS invariably
leads to death. While 10% of ALS cases are caused by inherited genetic mutations, most ALS occurs sporadically, with no
known genetic cause. Mutations in over 20 genes have been identified that cause the inherited ALS cases.
Characterization of these disease-causing genes have implicated several cellular pathways in the disease, with a prominent
role emerging for genes involved in the cellular control of RNA. Many new regulatory roles are being discovered for
RNA, particularly in neurons.
We have designed a viral vector product candidate, AAV-UPF1, with the aim of increasing UPF1 expression in
the motor neurons of ALS patients. In preclinical studies, we observed that administration of AAV-UPF1 reduced motor
neuron death thought to be driven by the toxic effects of several different genetic causes of ALS including, TDP-43, FUS
and C9orf72. Improvements in ALS-like symptoms related to limb strength and mobility in rodent models of ALS have
also been observed following administration of AAV-UPF1.
We believe that gene therapy using AAV-UPF1 may increase UPF1 levels in cells affected by ALS, and we intend
to deliver our viral vector product candidate to the central nervous system via intrathecal injection, or injection into the
spinal canal.
Alzheimer’s Disease
With the world population aging, Alzheimer’s disease has emerged as an extremely common and costly disease.
While some treatments that have temporary effects on Alzheimer’s disease symptoms are available, there is currently no
approved treatment that halts the progression of the disease.
Our Alzheimer’s disease program focuses on the endosomal trafficking pathway. In preclinical studies, we
observed that increasing levels of key retromer proteins may reverse endosomal trafficking defects. We are identifying
suitable retromer targets for gene augmentation in pre-symptomatic Alzheimer’s patients.
There are several reasons why gene therapy is, in principle, well suited for Alzheimer’s disease and other
neurodegenerative diseases. The first relates to the pathophysiology, time course, and anatomical spread of these disorders.
Neurodegenerative diseases generally begin locally in selectively vulnerable regions with “cell sickness” years before
rampant cell death and wide-spread anatomical distribution. To be most effective, we believe interventions should be
administrated early and will benefit from local delivery. Even then, however, an intervention must maintain its efficacy for
years because, unlike other cells in the body, neurons do not typically divide over the course of their life. We believe AAV-
delivered gene therapy products may have a durable effect. In the best case scenario, one delivery successfully taken up by
targeted neurons would be sufficient for years of efficacy.
An important component of our approach is the development and validation of surrogate markers of endosomal
dysfunction and predictive markers of Alzheimer’s disease. In particular, several well studied biomarkers linked to
Alzheimer’s disease, such as amyloid-beta and tau, have also been shown to be biomarkers of endosomal trafficking
dysfunction in neurons. Such biomarkers could potentially be used to identify patients with Alzheimer’s disease, as well
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as demonstrate potential product efficacy in the absence of Alzheimer’s disease symptoms. By targeting endosomal
trafficking dysregulation we aim to address the underlying cause of Alzheimer’s disease as well as other neurodegenerative
diseases, such as certain forms of Parkinson’s disease.
Our Strengths
In addition to our three core therapeutic areas of focus, our six ongoing clinical development programs, and our
broad pipeline of preclinical programs, we have core capabilities in viral vector design and optimization, gene therapy
manufacturing and a potentially transformative gene regulation platform technology that allows precise, dose responsive
control of gene expression by oral small molecules with dynamic range that can exceed 5000-fold. Utilizing the following
key strengths, we aim to develop, commercialize and expand our portfolio of product candidates.
● Deep Expertise in Gene Therapy Development: We believe our expertise in viral vector design,
optimization and process development allows us to efficiently advance gene therapy products candidates
from preclinical development to cGMP manufacturing and clinical development through commercialization.
● Potentially Transformative Gene Regulation Platform Technology: We are developing proprietary
technology to enable innovative gene therapy treatments whose expression can be turned on and off with an
easily administered small molecule. We believe the capacity for temporal control of gene therapy products
has the potential to transform the gene therapy landscape by opening up new treatment possibilities.
● Manufacturing Capabilities and Capacity: We have a flexible and scalable cGMP manufacturing facility
and production process in London, which we expect can supply our current clinical and preclinical programs
through regulatory approval and, should they be approved, provide sufficient capacity for their commercial
production. We have also expanded our manufacturing capabilities with our second, large scale cGMP viral
vector manufacturing facility and our first cGMP plasmid and DNA production facility in Shannon, Ireland.
Coming online in 2022 and stretching over 150,000 square feet, it is the first commercial-scale gene therapy
manufacturing site in Ireland and is unique in its scale and integrated capabilities. The site contains three
facilities, one built to be flexible and scalable for viral vector production for clinical and commercial supply,
in addition, a facility to manufacture plasmid DNA – the critical starting material for producing gene therapy
products – and thirdly, a QC hub performing advanced biochemical quality control testing for our clinical
and commercial programs.
● Robust and Diverse Clinical and Preclinical Pipeline: Applying our portfolio approach to gene therapy
product development, our initial focus is on treatments for ocular disorders, including IRDs and large
degenerative ocular diseases, as well as salivary gland disorders and neurodegenerative diseases. We have six
programs in clinical development, one program under a compassionate use specials license and a broad
preclinical development pipeline.
● Relationships with Leading Institutions: Our longstanding relationships with leading institutions and
experts provides us with guidance on development strategy and access to potential patients for our clinical
trials.
● Natural History Study Data: We sponsor ongoing prospective long-term natural history studies in IRDs
that facilitate our ability to efficiently enroll our treatment studies, potentially reducing clinical trial timelines
and providing insight into the appropriate endpoints for regulatory approval.
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Our Strategy
Our goal is to develop and commercialize innovative gene therapy products to treat serious disorders and broaden
the scope of indications that may be treatable by our gene therapies. Our strategy to achieve this goal is to:
● successfully complete clinical development, obtain regulatory approval and commercialize our pipeline of
gene therapy product candidates;
● continue to advance the development of our preclinical pipeline product candidates;
● utilize our viral vector design and optimization capabilities to identify and develop new gene therapies for
serious diseases;
● advance the development of our potentially transformative proprietary technology for regulating the activity
of gene therapy products using small molecules and initiate clinical trials of new regulatable product
candidates; and
● continue to pursue and evaluate further strategic collaborations with additional biotechnology and
pharmaceutical companies to leverage our capabilities, manufacturing capacity and proprietary gene
regulation technology.
Gene Therapy Overview
Gene therapy uses a delivery vehicle, referred to as a vector, to insert a functionally active gene into cells in the
body. The gene encodes a therapeutic protein that may block disease pathways or may enhance a deficient pathway. Gene
therapy has been studied for over 50 years, with a variety of different viral vectors employed to deliver therapeutic genes.
Since the first clinical study of therapeutic gene transfer in humans in 1990, thousands of gene therapy studies covering a
broad range of disease targets have been initiated. In recent years, the first gene therapies have received regulatory
approval, including approval by the FDA of Luxturna, marketed by Spark Therapeutics, Inc. which was purchased by
Roche, for treatment of RPE65-associated retinal dystrophy, and Zolgensma, marketed by AveXis, Inc., a Novartis
company, for the treatment of spinal muscular atrophy, resulting in a growing acceptance of gene therapy technology as a
potentially safe and effective therapeutic approach.
Our current programs use adeno-associated virus, or AAV, as the vector for delivering gene sequences into a
patient’s cells. The key components of an AAV vector include: (i) the capsid, or the outer viral protein shell that encloses
the target DNA, which is responsible for binding to the cell surface and allowing the therapeutic gene that it is carrying to
enter the cell; (ii) the therapeutic gene, or transgene, that encodes the therapeutic protein; and (iii) the promoter, or the
DNA sequence that drives the expression of the transgene. AAV is a good vector for gene therapy delivery because of its
relative safety and broad applicability. AAV is less immunogenic, or less prone to causing an immune reaction, than
previous generations of gene therapy vectors, such as adenoviral vectors and AAV does not readily integrate into the
genome of the target cell, reducing the potential for oncogenesis, or the induction of cancer. AAV vectors can transfer a
therapeutic gene into, or transduce, numerous cell types. Slight differences in capsid proteins can modulate the efficiency
with which different capsids deliver genes to different cells, thus allowing different AAV capsids to be selected to most
effectively target particular cell types.
The therapeutic gene sequence that enters the targeted cell includes both the protein coding region and an
engineered promoter sequence that is used to drive functional gene expression. These engineered promoters may be
designed to drive different levels of gene expression or to limit gene expression to specific cell types. Additional aspects of
the transgene sequence may be engineered for optimal gene expression, such as codon usage and synthetic introns, which
may enhance levels of therapeutic protein expression.
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Gene therapy can be used to address monogenic diseases, which result in mutations in a single gene in a patient’s
genome. In such cases, the viral vector is used to deliver a normal copy of the gene to the cells that are defective due to the
lack of the gene function. The normal gene then drives production of the missing protein and offers a therapeutic benefit in
patients with the disease. This gene replacement approach underlies all of our IRD programs.
In addition to replacing a gene that is defective or missing in a monogenic disease, gene therapy can also provide a
therapeutic impact by adding a particular new gene function to cells and thereby change cell behavior and function in other
types of diseases. This is the aim of our salivary gland programs, where our treatment is designed to promote water to flow
through otherwise impermeable cells in damaged salivary glands and increase saliva flow into the mouth. Additionally,
gene therapy may be used to deliver a therapeutic protein that may block a disease pathway or enhance a deficient cellular
pathway in multifactorial diseases such as wet AMD and neurodegenerative diseases, including ALS and Alzheimer’s
disease.
Importantly, AAV vectors enable targeting of therapeutic genes to non-dividing cells, in which they are thought to
remain for the rest of the cell’s life. This means that a single treatment may offer patients a durable effect and long-term
benefit. The specific cells of the eye, salivary gland and the neurons that we target in our current gene therapy programs
are largely non-dividing cells and preclinical evidence has shown that they can be effectively targeted by the specific AAV
capsids that we use, enabling us to potentially achieve a durable impact on each of the diseases that we treat.
Our Competitive Advantage in IRDs: Vector Engineering, Natural History Studies and Relationships with Leading
Institutions
IRDs as a class are the most common cause of blindness in the working age population worldwide and a leading
cause of impaired vision in children in developed countries. There are approximately 200,000 people in each of the U.S.,
EU and UK affected by IRDs. However, IRDs may be caused by mutations in over 300 identified genes, and in many
cases each genetically defined IRD may be a small patient population. Meaningful clinical trials for these sorts of rare
indications are especially challenging because they require access to sufficient patients and baseline data on each patient in
order to secure clear indicators of efficacy as a result of intervention. We seek to address this problem by sponsoring
prospectively designed natural history studies in each of the indications that we are treating in our Phase ½ trials.
For each of the natural history studies, baseline assessments are made upon enrollment, with follow up
assessments at later time points. A broad range of assessments are used, including functional tests, retinal imaging and
electrophysiological assessments. The same assessments used for each natural history study are used in our corresponding
clinical trial targeting the same indication, allowing us to compare the impact of our product candidates on the progression
of these diseases on a population, as well as individual patient basis.
We expect the natural history studies will enhance our understanding of disease progression for each indication
that we are targeting and allow us to identify optimal windows for intervention, provide specific functional and structural
parameters to quantify treatment effects and define clinical endpoints. These studies also provide us with a source of
potential patients for our treatment studies and have facilitated efficient enrollment of these studies. These patients are not
only genotyped, but also have up to five years of detailed functional and structural assessment data prior to enrollment into
an appropriate treatment study.
We also have longstanding active relationships and clinical site agreements with leading institutions in retinal
disorder treatments, including, among others, Moorfields Eye Hospital in London, the University of Michigan Kellogg Eye
Center, Massachusetts Eye and Ear, the Medical College of Wisconsin & Froedtert Hospital and the Casey Eye Institute at
the Oregon Health & Science University. These institutions and others where we have active relationships are among the
premier treatment centers for the indications that we are pursuing and provide us with access to potential patients for our
clinical trials and experts in IRDs who offer strategic guidance and expertise for our development
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strategy. They provide services with respect to our preclinical and clinical studies. Participants enrolled at the University
of Michigan Kellogg Eye Center and Massachusetts Eye and Ear Hospital may travel to the Medical College of
Wisconsin & Froedtert Hospital for adaptive optic assessments. The Casey Eye Institute at the Oregon Health & Science
University provides certain reading center and other clinical services with respect to our clinical trials.
Our Gene Regulation Platform
We are developing a potentially transformative technology designed to precisely and specifically control gene
therapy expression levels via dose-response to orally delivered small molecules. The aim of this gene regulation platform
is to transform gene therapy into a generalizable mechanism for the delivery of biologic drugs. The idea is that the gene
encoding a particular biologic drug or a therapeutic antibody would be delivered to target cells in the body, but these genes
would only be activated in the presence of a specific, proprietary small molecule. The therapeutic protein would be
manufactured by the body only in the presence of the small molecule so that intermittent production of the therapeutic
protein would be achieved by dosing with the small molecule drug.
This temporal regulation of gene therapy products by exogenous small molecules has long been a goal of gene
therapy researchers. The ability to regulate transgenes by introducing temporal control has the potential to transform the
gene therapy landscape and the biologics industry as a whole. Our approach focuses on riboswitches to regulate gene
expression rather than on the modulation of transcription factor activity.
Riboswitches are pieces of RNA that fold into alternative shapes depending on the binding of a specific small
molecule to that RNA sequence. One RNA shape allows the gene containing the riboswitch to be active, while the
alternative shape inactivates the gene. Riboswitches are used extensively by bacteria, but none have been identified in
mammalian cells to date.
We designed de-novo mammalian riboswitches that we have observed respond to small molecules to switch genes
on and off in mammalian cells and in vivo in mice. Our riboswitch contains a stretch of RNA sequence, called an aptamer,
that binds to a specific small molecule. The riboswitch is inserted into the therapeutic transgene cDNA. In the absence of
the specific small molecule, the unbound riboswitch folds into the shape that drives the destruction of the RNA message
and no therapeutic protein is produced in the absence of the small molecule. However, when the small molecule is present
and binds to the riboswitch it adopts the alternative RNA shape, causing stable messages to be formed and the therapeutic
protein to be produced.
One of the features of our mammalian riboswitch is its unprecedented dynamic range of greater than 5,000-fold.
We believe this technology is viable for a therapeutic product and is also the first instance of a proprietary system for
screening randomized aptamers and small molecules within mammalian cells for functional interactions.
Using our proprietary technology, we have demonstrated the ability to regulate multiple genes in vitro and in vivo
in multiple tissue types using multiple small molecules.
Our Manufacturing Capabilities
We own and operate a cGMP manufacturing facility situated in London, United Kingdom. Supporting our global
approach to clinical development and market supply, we designed the 29,000 square foot facility to meet multiple
regulatory standards, including the MHRA, EMA and FDA standards.
We believe our facility can supply our current clinical and preclinical programs through regulatory approval and,
should they be approved, provide sufficient capacity, for commercial production. Strategically, we believe our facility will
minimize our dependence on third-party CMOs, which we believe provides a significant strategic, clinical and commercial
advantage.
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Our London facility is flexible and scalable, with eleven independent air handling units, two cell culture suites and
three separate viral vector production suites, which allows us to produce multiple product candidates in parallel, as well as
sequentially at different scales. This allows us to accommodate up to three independent parallel manufacturing streams of
viral vector products that are isolated within dedicated production areas.
Our London manufacturing facility includes an integrated analytical department and in-house analytical tool kit
that allows for in-house release of clinical and commercial manufactured products. It is also equipped with dedicated areas
for microbiology, molecular biology, and cell-based analytics. Our analytical department can perform product related
assays, allowing us to retain and gain expertise that is normally lost to third parties. The close integration allows for rapid
turnaround and flexibility in scheduling of key assays, reducing lead times for product candidate releases. Further, our
dedicated product fill and finish suite allows us to manufacture a full range of clinical and commercial products under one
roof and in our control.
We have more than 205 highly trained multidisciplinary staff on our manufacturing team with backgrounds in a
diverse array of manufacturing sciences, technologies, analytics and production working together to expedite delivery of
gene therapy products.
We have identified and licensed a proprietary HEK-293 cell line that is well characterized and that we have
banked in hundreds of vials. The specific cell line, size of the bank, culture media, and cryopreservation agents have been
selected to facilitate bridging between process development platforms and targets. Our HEK-293 cells are suitable for both
the adherent culture platform and the bioreactor process. We believe the ability to use the same cell line throughout the
product and process development lifecycle will allow us to use a bracketed approach to process validation and
comparability, which we believe may reduce the time and costs related to their implementation.
We have expanded our manufacturing capabilities with our second, large scale cGMP viral vector manufacturing
facility and our first cGMP plasmid and DNA production facility in Shannon, Ireland. We completed the acquisitions of the
buildings and long leasehold interest in January 2021. The campus encompasses 150,000 square feet and contains three
facilities, one built to be flexible and scalable for viral vector production for clinical and commercial supply, in addition, a
facility to manufacture plasmid DNA – the critical starting material for producing gene therapy products – and thirdly, a
QC hub performing advanced biochemical quality control testing for MeiraGTx clinical and commercial programs.
We believe that building a second viral vector manufacturing facility and bringing cGMP plasmid and DNA
production, as well as QC analytics, in-house provides greater flexibility and efficiency as we advance our product
candidates through development, and should they be approved, commercial production.
Our significant investment in the development of our internal manufacturing capacity and expertise to allow for
better control over our process development timelines, costs, product quality and intellectual property provides us with a
key competitive advantage.
Competition
The biotechnology and pharmaceutical industries are characterized by rapidly changing technologies, significant
competition and a strong emphasis on intellectual property. This is true in the field of gene therapy generally, and in the
treatments for our key disease areas. While we believe that the strength of our team, gene therapy expertise, scientific
knowledge and intellectual property provide us with competitive advantages, we face competition from several sources,
including large and small biopharmaceutical companies, academic research institutions, government agencies and public
and private research institutions. Not only must we compete with other companies that are focused on gene therapy, but
any product candidates that we successfully develop and commercialize will compete with existing therapies and new
therapies that may become available in the future.
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Many of our competitors have significantly greater financial resources and expertise in research and development,
manufacturing, preclinical testing, clinical trials, regulatory approvals and product marketing than we do. These
competitors also compete with us in recruiting and retaining qualified scientific and management personnel, establishing
clinical trial sites and patient registration for clinical trials and acquiring technologies complementary to, or necessary for,
clinical programs. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more
resources being concentrated among a smaller number of our competitors. Smaller or early stage companies may also
prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
There are other organizations working to improve existing therapies or to develop new therapies for our initially
selected disease indications. Depending on how successful these efforts are, it is possible they may increase the barriers to
adoption and success for our product candidates, if approved. These efforts include two product candidates Applied
Genetic Technologies Corporation, or AGTC, have in Phase ½ clinical trials to treat ACHM related to CNGB3 and
CNGA3, respectively, a product candidate in Phase ½ clinical trials by each of 4D Molecular Therapeutics, Inc. and AGTC
to treat XLRP, as well as Luxturna, marketed by Spark Therapeutics, Inc., and has been approved to treat RPE65-
associated retinal dystrophy. We are not aware of any other gene therapy product candidates in clinical development
targeting xerostomia. We are aware of other ALS gene therapies utilizing different treatment mechanisms to treat different
genetically defined subsets of ALS patients, as well as gene therapy product candidates being developed for the treatment
of Parkinson’s disease, including those being developed by Voyager Therapeutics, Inc., Prevail Therapeutics, Inc. and
Axovant Sciences Ltd.
We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced
technologies become available. We expect any treatments that we develop and commercialize to compete on the basis of,
among other things, efficacy, safety, convenience of administration and delivery, price, the level of generic competition and
the availability of reimbursement from government and other third-party payors.
Intellectual Property
Our success depends in large part upon our ability to secure and maintain proprietary protection for our
technologies and products and to operate without infringing the proprietary rights of others. Our policy is to protect our
proprietary position by, among other methods, filing or collaborating with our licensors to file U.S. and foreign patent
applications related to our proprietary technology, inventions and improvements that are important to the development and
implementation of our business. We also use other forms of protection, such as confidential information and trademark
protection, particularly where we do not believe patent protection is appropriate or obtainable. Our patent portfolio
consists of a combination of issued patents and pending patent applications that are owned or licensed from third parties.
As of December 31, 2022, we own, co-own, have an exclusive license, or an exclusive option to license 297
United States and foreign issued or allowed patents and 466 patent applications, pending in the United States and
internationally. For any individual patent, the term depends on the applicable law in the country in which the patent is
granted. In most countries where we have filed patent applications or in-licensed patents and patent applications, patents
have a term of 20 years from the application filing date or earliest claimed non-provisional priority date. In the United
States, the patent term is 20 years but may be shortened if a patent is terminally disclaimed over another patent that expires
earlier. The term of a U.S. patent may also be lengthened by a patent term adjustment, in order to address administrative
delays by the United States Patent and Trademark Office in granting a patent. In the United States, the term of a patent that
covers an FDA-approved drug or biologic may be eligible for patent term extension in order to restore the period of a
patent term lost during the premarket FDA regulatory review process. The Drug Price Competition and Patent Term
Restoration Act of 1984, or the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the natural
expiration of the patent. The patent term restoration period is generally equal to the regulatory review period for the
approved product which period occurs after the date the patent is issued, subject to certain exceptions. Only one patent
may be extended for a regulatory review period for any product, and the application
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for the extension must be submitted prior to the expiration of the patent. In the future, we may decide to apply for
restoration of patent term for one of our currently owned or licensed patents to extend its current expiration date, depending
on the expected length of the clinical trials and other factors involved in the filing of the relevant Biologics License
Application.
Company-Owned Intellectual Property
We own eight patent families relating to gene regulation platform technologies developed by us. The first patent
family includes 49 issued patents in the United States (two patents), African Regional Intellectual Property Organization,
Albania, Australia, Austria, Belgium, Bulgaria, China, Croatia, Cyprus, Czech, Denmark, Estonia, Eurasian Patent
Organization, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, Ireland, Israel, Italy, Japan, Latvia,
Lithuania, Luxembourg, Malaysia, Malta, Mexico, Monaco, Netherlands, North Macedonia, Norway, Philippines, Poland,
Portugal, Romania, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland/Liechtenstein, Turkey and the
United Kingdom and 22 pending patent applications with claims directed to compositions of matter and methods of use in
the United States, Europe, African Regional Intellectual Property Organization, Australia, Brazil, Canada, China, Egypt,
Eurasian Patent Organization, Hong Kong, India, Indonesia, Israel, Japan, Republic of Korea, Malaysia, Mexico, New
Zealand (two applications), Philippines, Singapore, South Africa and Vietnam. Patents issued from this family are
expected to expire February 2, 2036, not including any patent term adjustments that may extend the patent term in certain
jurisdictions.
The second patent family includes two issued patents in the United States and China and 23 pending patent
applications with claims directed to compositions of matter and methods of use in the United States, Europe, African
Regional Intellectual Property Organization, Australia, Brazil, Canada, Egypt, Eurasian Patent Organization, Hong Kong,
India, Indonesia (two applications), Israel, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Philippines (two
applications), Singapore, South Africa and Vietnam. Patents issued from this family are expected to expire February 2,
2037, not including any patent term adjustments that may extend the patent term in certain jurisdictions.
The third patent family includes two issued patents in Indonesia and Japan and 20 pending patent applications
with claims directed to compositions of matter and methods of use in the United States, Europe, African Regional
Intellectual Property Organization, Australia, Brazil, Canada, China, Egypt, Eurasian Patent Organization, Hong Kong,
India, Israel, Republic of Korea, Malaysia, Mexico, New Zealand, Philippines, Singapore, South Africa and Vietnam.
Patents issued from this family are expected to expire February 2, 2037, not including any patent term adjustments that
may extend the patent term in certain jurisdictions.
The fourth patent family includes two issued patents in the United States and Japan and 22 pending patent
applications with claims directed to compositions of matter and methods of use in the United States, Europe, African
Regional Industrial Property Organization, Australia, Brazil, Canada, China, Egypt, Eurasian Patent Organization, Hong
Kong, India, Indonesia, Israel, Republic of Korea, Malaysia, Mexico, New Zealand (two applications), Philippines,
Singapore, South Africa and Vietnam. Patents issued from this family are expected to expire August 3, 2037, not including
any patent term adjustments that may extend the patent term in certain jurisdictions.
The fifth patent family includes one issued patent in Japan and 21 pending patent applications with claims directed
to compositions of matter and methods of use in the United States, Europe, African Regional Industrial Property
Organization, Australia, Brazil, Canada, China, Eurasian Patent Organization, Egypt, Hong Kong, Indonesia, Israel, India,
Republic of Korea, Mexico, Malaysia, New Zealand, Philippines, Singapore, South Africa and Vietnam. Patents issued
from this family are expected to expire on March 2, 2038, not including any patent term adjustments that may extend the
patent term in certain jurisdictions.
The sixth patent family includes one issued patent in Japan and 21 pending patent applications with claims
directed to compositions of matter and methods of use in the United States, Europe, African Regional Industrial Property
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Organization, Australia, Brazil, Canada, China, Eurasian Patent Organization, Egypt, Hong Kong, India, Indonesia, Israel,
Republic of Korea, Mexico, Malaysia, New Zealand, Philippines, Singapore, South Africa and Vietnam. Patents issued
from this family are expected to expire on February 21, 2038, not including any patent term adjustments that may extend
the patent term in certain jurisdictions.
The seventh patent family includes 21 pending patent applications with claims directed to compositions of matter
and methods of use in the United States, Europe, African Regional Industrial Property Organization, Australia, Brazil,
Canada, China, Eurasian Patent Organization, Egypt, India, Indonesia, Israel, Japan, Republic of Korea, Mexico, Malaysia,
New Zealand, Philippines, Singapore, South Africa and Vietnam. Patents issued from this family are expected to expire on
March 24, 2041, not including any patent term adjustments that may extend the patent term in certain jurisdictions.
The eighth patent family includes one pending Patent Cooperation Treaty patent application with claims directed
to compositions of matter and methods of use. Patents issued from this family are expected to expire on December 15,
2042, not including any patent term adjustments that may extend the patent term in certain jurisdictions.
Licensed Intellectual Property
Certain of our issued patents and pending patent applications are exclusively licensed to us from UCL Business,
Plc (“UCLB”), Brandeis University (“Brandeis”) and the National Institute of Dental and Craniofacial Research
(“NIDCR”).
UCLB
The UCLB portfolio includes three licensed patent families relating to our RPE65, CNGA3, and RPGR gene
therapy programs and one optioned patent family relating to our dry AMD gene therapy program with a combined 100
United States and foreign issued patents and 53 pending patent applications.
The first patent family, with claims directed to compositions of matter and methods of use relating to our RPE65
program, and the AAV-RPE65 product candidate includes 43 issued patents in the United States, Albania, Australia,
Austria, Belgium, Bulgaria, China, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hong
Kong, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Mexico, Monaco,
Netherlands, North Macedonia, Norway, Philippines, Poland, Portugal, Romania, San Moreno, Serbia, Singapore,
Slovakia, Slovenia, Spain, Sweden, Switzerland/Liechtenstein, Turkey and the United Kingdom and 13 pending patent
applications in the United States, Europe, Brazil, Canada, Egypt, Hong Kong, Israel, Malaysia, Mexico, New Zealand (two
applications), Nigeria and Thailand. Patents issued from this family are expected to expire February 8, 2036, not including
any patent term extensions or adjustments that may extend the patent term in certain jurisdictions.
The second patent family includes 22 pending patent applications with claims directed to compositions of matter
and methods of use relating to our achromatopsia program and the AAV-CNGA3 product candidate in the United States,
Europe, African Regional Intellectual Property Organization, Australia, Brazil, Canada, China, Egypt, Eurasian Patent
Convention, Hong Kong, India, Indonesia, Israel, Japan, Republic of Korea, Malaysia, Mexico, New Zealand, Philippines,
Singapore, South Africa and Vietnam. Patents issued from this family are expected to expire January 14, 2039, not
including any patent term extensions or adjustments that may extend the patent term in certain jurisdictions.
The third patent family, with claims directed to compositions of matter and methods of use relating to our retinitis
pigmentosa program and the botaretigene sparoparvovec product candidate, includes 42 issued patents in the United States
(two patents), Albania, Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan (three patents), Latvia, Lithuania, Luxembourg, Malta, Monaco,
Netherlands, North Macedonia, Norway, Poland, Portugal, Romania, San Moreno, Serbia, Slovakia, Slovenia,
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Spain, Sweden, Switzerland/Liechtenstein, Turkey and the United Kingdom and four pending applications in Europe,
Canada, China and Hong Kong. Patents issued from this family are expected to expire July 17, 2035, not including any
patent term extensions or adjustments that may extend the patent term in certain jurisdictions.
The fourth patent family which we have optioned, with claims directed to compositions of matter and methods of
use relating to our dry AMD gene therapy program, includes 11 issued patents in Australia, Canada, Indonesia, Israel,
Japan, Republic of Korea, Malaysia, New Zealand, Nigeria, Singapore and South Africa and 14 pending applications in the
United States, Europe, African Regional Intellectual Property Organization, Australia, Brazil, China, Eurasian Patent
Organization, Hong Kong (two applications), Mexico, Philippines, Singapore, Thailand and Vietnam. Patents issued from
this family are expected to expire February 19, 2036, not including any patent term extensions or adjustments that may
extend the patent term in certain jurisdictions.
Brandeis
The licensed Brandeis portfolio includes one patent family with claims directed to compositions of matter and
methods of use relating to our ALS gene therapy program and the AAV-UPF1 product candidate.
This patent family includes 17 issued patents in the United States (two patents), Austria, Australia, Belgium,
Denmark, France, Germany, Hong Kong, Ireland, Italy, Netherlands, Norway, Spain, Sweden, Switzerland/Liechtenstein
and the United Kingdom and four pending patent applications in the United States, Europe, Canada and Hong Kong.
Patents issued from this family are expected to expire October 8, 2033, not including any patent term extensions or
adjustments that may extend the patent term in certain jurisdictions.
National Institute of Dental and Craniofacial Research
The exclusively licensed NIDCR portfolio includes one patent family with claims directed to compositions of
matter and methods of use relating to our Sjogren’s Syndrome gene therapy program. This patent family includes 16
issued patents in the United States, Canada, Australia, Austria, Belgium, Denmark, France, Germany, Ireland, Italy,
Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom. Patents issued from this family are expected
to expire August 30, 2033, not including any patent term extensions or adjustments that may extend the patent term in
certain jurisdictions.
License Agreements
License Agreements with UCLB
We previously entered into several license agreements with UCLB, covering the following inherited retinal
disease programs: (a) ACHM caused by mutations in CNGB3; (b) ACHM caused by mutations in CNGA3; (c) XLRP; and
(d) RPE65-mediated IRD (together, the “Licensed Gene Therapy Programs”). The terms of these license agreements were
set forth in (i) the license agreement, dated February 4, 2015, as amended, between Athena Vision Ltd. and UCLB (the
“First UCLB License Agreement”); (ii) the license agreements, dated July 29, 2017, as amended, between MeiraGTx UK
II Limited and UCL Business, Plc (the “Second UCLB License Agreement”); and (iii) the license agreement, dated March
15, 2018, among MeiraGTx Limited, MeiraGTx UK II Limited and UCL Business Plc (the “Third UCLB License
Agreement” and, collectively, the “prior UCLB license agreements”). In January and February 2019, we amended and
restated the prior UCLB license agreements to establish a new standalone license agreement (each, a “Stand-Alone UCLB
Agreement”) for each of the Licensed Gene Therapy Programs. We have removed from each of the Stand-Alone UCLB
Agreements our obligation to pay UCLB a share of certain sublicensing revenues as was provided under the First UCLB
License Agreement and have aligned the material terms of the Stand-Alone UCLB Agreements to track those under the
Third UCLB License Agreement as previously disclosed and a summary of which is set forth below as is now reflected in
each of the Stand-Alone UCLB Agreements.
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Under the terms of the Third UCLB License Agreement, we paid an initial upfront payment of £6,994, and issued
to UCLB £100,000 of our ordinary shares.
Under each of the Stand-Alone UCLB Agreements, UCLB granted us an exclusive, worldwide, and sublicensable
license under certain intellectual property rights controlled by UCLB relating to one of the Licensed Gene Therapy
Programs to develop and commercialize licensed products in a relevant field of gene therapy. We must use diligent efforts
to develop and commercialize the licensed products.
Under the terms of each Stand-Alone UCLB Agreement, we are required to pay UCLB sales milestone payments
of up to a total of £39.8 million in the aggregate and an annual management fee of £50 thousand until certain royalty
payments have been paid. Additionally, pursuant to the Stand-Alone UCLB Agreement related to CNGB3, we paid UCLB
an upfront payment of £1.5 million and issued £1.5 million of the Company’s ordinary shares.
Commencing on the first commercial sale of licensed products under each Stand-Alone UCLB Agreement, we
must make low single-digit percentage royalty payments to UCLB on net sales of such products. Our royalty obligations
under each agreement continue on a licensed product-by-licensed product and country-by-country basis until the latest to
occur of the expiration of the last valid claim of a patent claiming such licensed product in such country, the expiration of
any regulatory exclusivity for all licensed products in such country, or the tenth anniversary of first commercial sale of
such licensed product in such country.
Each Stand-Alone UCLB Agreement will remain in effect on a country-by-country basis until the expiration of
the last payment obligation in such country. Each Stand-Alone UCLB Agreement may be terminated: (a) by either party in
the event of the other party’s material breach that remains uncured for 30 days (or for 14 days in the case of breaches
related to payment obligations), (b) by either party for the other party’s insolvency, (c) immediately by UCLB if we are in
persistent breach of the agreement and the parties fail to agree upon a mechanism to remedy such persistent breach (or we
do not comply with such agreed upon mechanism), or (d) immediately by UCLB if we undergo certain change of control
events or if we enter into a sublicense with certain prohibited persons, which may adversely affect UCL’s and/or UCLB’s
reputation. Each Stand-Alone UCLB Agreement may also be terminated or converted to a non-exclusive license by UCLB
upon three months’ notice if we, based on an independent expert determination, fail to use diligent efforts to develop and
commercially exploit licensed products and do not cure such failure within a certain cure period.
License Agreement between BRI-Alzan Inc. and Brandeis
In May 2013, BRI-Alzan Inc., or BRI-Alzan, entered into a license agreement with Brandeis, or the Brandeis
Agreement. On December 31, 2015, we entered into an Agreement and Plan of Merger, or the BRI-Alzan Merger
Agreement, with BRI-Alzan, and the Brandeis Agreement was assigned to us as a result of such merger. Pursuant to the
terms of the BRI-Alzan Merger Agreement, we agreed to make cash payments to the sellers of BRI-Alzan upon the
achievement of certain milestones, subject to an aggregate cap of $4,500,000. In addition, we agreed to make low single-
digit percentage royalty payments to the sellers of BRI-Alzan on net sales of any product for the therapeutic or
prophylactic treatment of ALS that is covered by a valid claim of the patent rights licensed under the Brandeis Agreement.
The BRI-Alzan Merger Agreement includes customary confidentiality, indemnification, non-competition and non-
solicitation provisions.
Pursuant to the Brandeis Agreement, Brandeis granted us an exclusive, worldwide license under certain patent
rights with claims directed to compositions of matter and methods of use relating to our ALS gene therapy program and the
AAV-UPF1 product candidate to develop and commercialize licensed products.
We must use commercially reasonable efforts to develop and commercialize licensed products. We also acquired
non-exclusive, worldwide licenses to certain know-how controlled by Brandeis to exploit licensed products. We are
required to pay Brandeis developmental and regulatory milestone payments of up to a total of $1.0 million in the aggregate.
We are also required to pay Brandeis annual license maintenance fees ranging from $15,000 to $100,000
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depending on the development stage of the licensed product. Commencing on the first commercial sale of licensed
products, we must make low single-digit percentage royalty payments to Brandeis on net sales of such products. In
addition, we must pay Brandeis mid-teen percentages of sublicensing revenues.
The Brandeis Agreement will remain in effect on a country-by-country basis until the earlier of: (a) 1 year after
the date that we, our affiliates or sublicensees last sell any licensed product in such country or (b) until the expiration of the
last–to-expire of the licensed patent rights in such country. The Brandeis Agreement may be terminated by Brandeis for
our insolvency or for our material breach that remains uncured for 60 days (or for 30 days in the case of breaches related to
payment obligations). Such material breach may be cured only once in any 12-month period. Brandeis may also terminate
any license granted under the Brandeis Agreement if we fail to timely achieve certain regulatory milestone events.
Trade Secrets
We also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our
competitive advantage. We require inventors who are identified on any company-owned patent applications to assign
rights to us. We also rely on confidentiality agreements with our employees, consultants and other advisors to protect our
proprietary information. Our policy is to require third parties that receive material confidential information to enter into
confidentiality agreements with us.
Trademarks
Our trademark MeiraGTx has been registered in the U.S., UK and EU.
Government Regulation and Product Approval
Governmental authorities in the U.S., at the federal, state and local level, and other countries extensively regulate,
among other things, the research, development, testing, manufacture, labeling, packaging, promotion, storage, advertising,
distribution, marketing, post-approval monitoring and reporting and export and import of products such as those we are
developing. The processes for obtaining regulatory approvals in the United States and in foreign countries and
jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities,
are extensive and require the expenditure of substantial time and financial resources.
FDA Approval Process
We expect our product candidates to be regulated as biologics. Biological products, including gene therapy
products, are subject to extensive regulation by the FDA under the Federal Food, Drug, and Cosmetic Act, or FDCA, and
the Public Health Service Act, or PHSA, and other federal, state, local and foreign statutes and regulations. Both the
FDCA and the PHSA and their corresponding regulations govern, among other things, the research, development, safety,
testing, packaging, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-
approval monitoring and reporting, sampling, and import and export of biological products.
U.S. Biological Products Development Process
Our products must be approved by the FDA through the Biologics License Application, or BLA, process before
they may be legally marketed in the United States. The process required by the FDA before a biologic may be marketed in
the United States generally involves the following:
● completion of extensive nonclinical studies, sometimes referred to as preclinical laboratory tests, and
preclinical studies and applicable requirements for the humane use of laboratory animals and formulation
studies in accordance with applicable regulations, including good laboratory practices, or GLPs;
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● submission to the FDA of an IND which must become effective before clinical trials may begin;
● approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site
before the trial is commenced;
● performance of adequate and well controlled human clinical trials according to the FDA’s regulations
commonly referred to as good clinical practices, or GCPs, and any additional requirements for the protection
of human research subjects and their health information, to establish the safety and efficacy of the proposed
biological product for its intended use;
● submission to the FDA of a BLA for marketing approval that includes substantive evidence of safety, purity,
potency and efficacy from results of nonclinical testing and clinical trials;
● satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological
product is produced to assess compliance with cGMP to assure that the facilities, methods and controls are
adequate to preserve the biological product’s identity, strength, quality and purity;
● potential FDA audit of the nonclinical and clinical study sites that generated the data in support of the BLA;
and
● FDA review and approval, or licensure, of the BLA.
Before testing any biological product candidate, including a gene therapy product, in humans, the product
candidate enters the preclinical testing stage. Preclinical tests, also referred to as nonclinical studies, include laboratory
evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and
activity of the product candidate. The conduct of the preclinical tests must comply with federal regulations and
requirements, including GLPs. The clinical trial sponsor must submit the results of the preclinical tests, together with
manufacturing and controls, information about product chemistry, analytical data, any available clinical data or literature
and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical testing, such as reproductive toxicity
tests and carcinogenicity in animals, may continue even after the IND is submitted. The IND automatically becomes
effective 30 days after receipt by the FDA, after which human clinical trials may begin unless the FDA places the clinical
trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any
outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a biological product
candidate at any time before or during clinical trials due to safety concerns or non-compliance. If the FDA imposes a
clinical hold, trials may not recommence without FDA authorization and then only under terms authorized by the FDA.
In addition to the IND submission process, sponsors of certain human clinical trials of cells containing
recombinant or synthetic nucleic acid molecules, including human gene transfer studies, are subject to evaluation and
assessment by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees
research utilizing recombinant or synthetic nucleic acid molecules at that institution, pursuant to the National Institutes of
Health’s Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules, or NIH Guidelines. The
IBC assesses the safety of the research and identifies any potential risk to the public health or the environment, and such
review may result in some delay before initiation of a clinical trial. While the NIH Guidelines are not mandatory unless the
research in question is being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic
nucleic acid molecule research, many companies and other institutions not otherwise subject to the NIH Guidelines
voluntarily follow them.
Clinical trials involve the administration of the biological product candidate to healthy volunteers or patients
under the supervision of qualified investigators, generally physicians not employed by or under the study sponsor’s
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control. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial,
dosing procedures, subject selection and exclusion criteria, the efficacy measurements to be evaluated and the parameters
to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain adverse
events should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND.
Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising the GCP
requirements, including the requirement that all research subjects provide informed consent. Further, each clinical trial
must be reviewed and approved by an independent institutional review board, or IRB, at or servicing each institution at
which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of study participants
and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are
reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent that
must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until
completed.
Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:
● Phase 1. The biological product candidate is initially introduced into healthy human subjects and tested for
safety. In the case of some products for severe or life-threatening diseases, especially when the product may
be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often
conducted in patients.
● Phase 2. The biological product candidate is evaluated in a limited patient population to identify possible
adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted
diseases and to determine dosage tolerance, optimal dosage and dosing schedule.
● Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an
expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended
to establish the overall risk/benefit ratio of the product and provide an adequate basis for product labeling.
In most cases, the FDA requires two adequate and well controlled Phase 3 clinical trials to demonstrate the safety
and efficacy of a biological product. In some instances, a single Phase 3 trial, together with other confirmatory evidence
may be sufficient to support a BLA submission. Post-approval clinical trials, sometimes referred to as Phase 4 clinical
trials, may be conducted after initial marketing approval. These clinical trials are used to gain additional experience from
the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up. The FDA
recommends that sponsors observe subjects for potential gene therapy-related delayed adverse events for a 15-year period,
including a minimum of five years of annual examinations followed by ten years of annual queries, either in person or by
questionnaire.
During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all
clinical activities, clinical data, and clinical trial investigators. Annual progress reports detailing the results of the clinical
trials must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA, the NIH and the
investigators for serious and unexpected adverse events, any findings from other trials, tests in laboratory animals or in
vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious
suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety
report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also
must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after
the sponsor’s initial receipt of the information. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed
successfully within any specified period, if at all. The FDA or the sponsor or its data safety monitoring board may suspend
or permanently discontinue a clinical trial at any time on various grounds, including a finding that the research subjects or
patients are being exposed to an unacceptable health risk or the clinical trial is not being conducted in accordance with
FDA regulations. Similarly, an IRB can suspend or terminate approval of a clinical
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study at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the
biological product candidate has been associated with unexpected serious harm to patients. The FDA and the IRB may
also halt, terminate or impose other conditions if either believes the patients are subject to unacceptable risk.
There are also requirements governing the reporting of ongoing clinical trials and completed clinical trial results
to public registries. Sponsors of clinical trials of FDA-regulated products, including biologics, are required to register and
disclose certain clinical trial information, which is publicly available at www.clinicaltrials.gov. Information related to the
product, patient population, phase of investigation, study sites and investigators, and other aspects of the clinical trial is
then made public as part of the registration. Sponsors are also obligated to discuss the results of their clinical trials after
completion. Disclosure of the results of these trials can be delayed until the new product or new indication being studied
has been approved.
Concurrent with clinical trials, companies usually complete additional animal trials and must also develop
additional information about the physical characteristics of the biological product candidate as well as finalize a process for
manufacturing the product in commercial quantities in accordance with cGMP requirements. To help reduce the risk of the
introduction of adventitious agents with use of biological products, the PHSA emphasizes the importance of manufacturing
control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of
consistently producing quality batches of the product candidate and, among other things, the sponsor must develop
methods for testing the identity, strength, quality, potency and purity of the final biological product. Additionally,
appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the
biological product candidate does not undergo unacceptable deterioration over its shelf life.
U.S. Review and Approval Processes
After the completion of clinical trials of a biological product candidate, FDA approval of a BLA must be obtained
before commercial marketing and distribution of the biological product. The BLA must include results of product
development, laboratory and animal trials, human trials, information on the manufacture, pharmacology, chemistry and
controls of the product, proposed labeling and other relevant information. In addition, under the Pediatric Research Equity
Act, or PREA, a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the biological
product candidate for the claimed indications in all relevant pediatric subpopulations and to support dosing and
administration for each pediatric subpopulation for which the product is safe and effective.
A sponsor who is planning to submit a marketing application for a drug or biological product that includes a new
active ingredient, new indication, new dosage form, new dosing regimen or new route of administration must submit an
initial Pediatric Study Plan, or PSP, within sixty days after an end-of-Phase 2 meeting or as may be agreed between the
sponsor and FDA. The initial PSP must include, among other things, an outline of the pediatric study or studies that the
sponsor plans to conduct, including to the extent practicable study objectives and design, age groups, relevant endpoints
and statistical approach, or a justification for not including such detailed information, and any request for a deferral of
pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with
supporting information, along with any other information specified in FDA regulations. The FDA and the sponsor must
reach agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the
pediatric plan need to be considered based on data collected from nonclinical studies, early phase clinical trials, and/or
other clinical development programs. The FDA may grant deferrals for submission of data or full or partial waivers.
Unless otherwise required by regulation, PREA does not apply to any biological product for an indication for which orphan
designation has been granted.
Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a user
fee. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA also imposes an annual program fee for products.
Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first
human drug application filed by a small business. Additionally, no user fees are assessed on BLAs for products designated
as orphan drugs, unless the product also includes a non-orphan indication.
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Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is
substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems
incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the
BLA must be resubmitted with the additional information. The resubmitted application is also subject to an initial review
before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive
review of the BLA. The FDA’s goal is to complete the review of standard BLAs within ten months after it accepts an
application for filing, or, if the application qualifies for priority review, six months after the FDA accepts the application
for filing. In both standard and priority reviews, the review process is often significantly extended by FDA requests for
additional information or clarification.
The FDA reviews the BLA to determine, among other things, whether the proposed product is safe and potent, or
effective, for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in
accordance with cGMP requirements to assure and preserve the product’s identity, safety, strength, quality, potency and
purity. The FDA may refer applications for novel biological products or biological products that present difficult questions
of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review,
evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA
is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when
making decisions. During the biological product approval process, the FDA also will determine whether a Risk Evaluation
and Mitigation Strategy, or REMS, is necessary to assure the safe use of the biological product candidate. If the FDA
concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS; the FDA will not approve the BLA
without a REMS, if required.
Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured. The FDA will
not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP
requirements and adequate to assure consistent production of the product within required specifications. Additionally,
before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical trials were
conducted in compliance with IND study requirements and GCP requirements. To assure cGMP and GCP compliance, an
applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production,
and quality control.
Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA
does not satisfy its regulatory criteria for approval and deny approval. If the agency decides not to approve the BLA in its
present form, the FDA will issue a complete response letter that usually describes all of the specific deficiencies in the
BLA identified by the FDA. The deficiencies identified may be minor, for example, requiring labeling changes, or major,
for example, requiring additional clinical trials. Additionally, the complete response letter may include recommended
actions that the applicant might take to place the application in a condition for approval. If a complete response letter is
issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the
application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the BLA,
the FDA will issue an approval letter. Under the current PDUFA guidelines, the FDA has committed to reviewing such
resubmissions in two or six months of receipt depending on the type of information included.
If regulatory approval of a product is granted, such approval will be granted for particular indications and may
entail limitations on the indicated uses for which such product may be marketed. For example, the FDA may approve the
BLA with a REMS, to ensure the benefits of the product outweigh its potential risks. A REMS is a safety strategy to
manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to
such medicines by managing their safe use, and could include medication guides, physician communication plans, or
elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.
The FDA also may condition approval on, among other things, changes to proposed labeling or the development of
adequate controls and specifications. The requirement for a REMS can materially affect the potential market and
profitability of the product.
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Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing
requirements is not maintained or if problems occur after the product reaches the marketplace. Changes to some of the
conditions established in an approved BLA, including changes in indications, product labeling, manufacturing processes or
facilities, require submission and FDA approval of a new BLA or BLA supplement before the change can be implemented.
A BLA supplement for a new indication typically requires clinical data similar to that in the original application, and the
FDA uses the same procedures and actions in reviewing BLA supplements as it does in reviewing BLAs. The FDA may
require one or more Phase 4 post-market studies or surveillance to further assess and monitor the product’s safety and
effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-
marketing studies.
Orphan Drug Designation
The FDA may grant orphan drug designation to drugs or biologics intended to treat a rare disease or condition that
affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United
States, there is no reasonable expectation that the cost of developing and marketing the drug or biologic for this type of
disease or condition will be recovered from its sales in the United States. Orphan drug designation must be requested
before submitting a BLA. After the FDA grants orphan product designation, the identity of the therapeutic agent and its
potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or
shorten the duration of the regulatory review and approval process.
In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant
funding towards clinical trial costs, tax advantages and BLA user-fee waivers. In addition, if a product receives the first
FDA approval for the indication for which it has orphan designation, the product is entitled to orphan drug exclusivity,
which means the FDA may not approve any other application, including a full BLA, to market the same drug or biologic
for the same disease or condition for a period of seven years, except in limited circumstances, such as a showing of clinical
superiority over the product with orphan exclusivity or where the manufacturer with orphan exclusivity is unable to assure
sufficient quantities of the approved orphan-designated product. Competitors, however, may receive approval of different
products for the indication for which the orphan product has exclusivity or obtain approval for the same product but for a
different indication for which the orphan product has exclusivity. Orphan product exclusivity also could block the approval
of one of our products for seven years if a competitor obtains approval of the same biological product as defined by the
FDA or if our product candidate is determined to be contained within the competitor’s product for the same indication or
disease. If a drug or biological product designated as an orphan product receives marketing approval for an indication
broader than what is designated, it may not be entitled to orphan product exclusivity. In addition, exclusive marketing
rights in the United States may be lost if the FDA later determines that the request for designation was materially defective
or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare
disease or condition.
Expedited Development and Review Programs
The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new
biological products that meet certain criteria. Specifically, new biological products are eligible for Fast Track designation
if they are intended to treat a serious or life-threatening disease or condition and demonstrate the potential to address unmet
medical needs for the disease or condition. Fast Track designation applies to the combination of the product and the
specific indication for which it is being studied. The sponsor of a new biologic may request that the FDA designate the
biologic as a Fast Track product at any time during clinical development of the product. The FDA must determine if the
biologic product candidate qualifies for Fast Track designation within 60 days of receipt of the sponsor’s request. Unique
to a Fast Track product, the FDA may consider for review sections of the marketing application on a rolling basis before
the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the
application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the
sponsor pays any required user fees upon submission of the first section of the application. In addition, a Fast Track
designated product is eligible for more frequent meetings with the FDA to discuss
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the biologic product’s development plan and ensure collection of appropriate data needed to support approval, and may
result in more frequent written communication from the FDA about such things as the design of the proposed clinical trials
and use of biomarkers.
In addition, the FDA established a Breakthrough Therapy designation which is intended to expedite the
development and review of products that are intended to treat serious or life-threatening diseases or conditions. A
Breakthrough Therapy-designated product candidate is defined as a drug or biologic that is intended, alone or in
combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition, and
preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies
on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical
development. The designation includes all of the features of Fast Track designation, as well as more intensive FDA
interaction and guidance.
Any product submitted to the FDA for marketing, including a product that has received a Fast Track or
Breakthrough Therapy designation, may be eligible for other types of FDA programs intended to expedite development
and review, such as priority review and accelerated approval. An application seeking marketing approval for a biologic
product is eligible for priority review if the biologic has the potential to provide safe and effective therapy where no
satisfactory alternative therapy exists or there is potential for a significant improvement in the treatment, diagnosis or
prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources to the
evaluation of an application for a new biological product designated for priority review in an effort to facilitate the review.
Priority review means the FDA’s goal is to take action on an application within six months (compared to 10 months under
standard review).
Additionally, a product may be eligible for accelerated approval. Biological products studied for their safety and
effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing
treatments may be eligible for accelerated approval, which means that they may be approved on the basis of adequate and
well controlled clinical trials establishing that the product has an effect on a surrogate endpoint that is reasonably likely to
predict a clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity or
mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability
or lack of alternative treatments. As a condition of approval, the FDA may require that a sponsor of a biological product
subject to accelerated approval perform adequate and well-controlled post-marketing Phase 4 clinical trials. Failure to
conduct required post-approval trials, or to confirm a clinical benefit during post-marketing trials, will allow the FDA to
withdraw the approved biologic product from the market on an expedited basis. In addition, the FDA currently requires as
a condition for accelerated approval pre-approval of promotional materials, which could adversely impact the timing of the
commercial launch of the product. Fast Track designation, priority review and accelerated approval do not change the
standards for approval but may expedite the development or approval process.
Furthermore, as part of its implementation of the 21st Century Cures Act, the FDA established the Regenerative
Medicine Advanced Therapy, or RMAT, designation, to facilitate an efficient development program for, and expedite
review of, certain drugs and biological products. A biological product is eligible for RMAT designation if it qualifies as a
RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any
combination product using such therapies or products, with limited exceptions, and is intended to treat, modify, reverse, or
cure a serious or life-threatening disease or condition and for which preliminary clinical evidence indicates that the
biological product has the potential to address unmet medical needs for such a disease or condition. Like Breakthrough
Therapy designation, RMAT designation provides potential benefits that include more frequent meetings with FDA to
discuss the development plan for the product candidate, and eligibility for rolling review and priority review. Products
granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate
endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number
of sites, including through expansion to additional sites. RMAT-designated products that receive accelerated approval may,
as appropriate, fulfill their post-approval requirements through the submission of clinical
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evidence, clinical trials, patient registries, or other sources of real world evidence (such as electronic health records);
through the collection of larger confirmatory data sets; or via post-approval monitoring of all patients treated with such
therapy prior to approval of the therapy.
Fast Track designation, priority review, accelerated approval, Breakthrough Therapy designation and RMAT
designation do not change the standards for approval but may expedite the development or approval process. Even if these
designations are received, the FDA may later decide that a product candidate no longer meets the conditions for
qualification.
Post-Approval Requirements
Rigorous and extensive FDA regulation of biological products continues after approval, particularly with respect
to cGMP requirements. Manufacturers are required to comply with applicable requirements in the cGMP regulations,
including quality control and quality assurance and maintenance of records and documentation. Other post-approval
requirements applicable to biological products, include reporting of cGMP deviations that may affect the identity, potency,
purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse effects, reporting
updated safety and efficacy information, and complying with electronic record and signature requirements.
After a BLA is approved, the product also may be subject to official lot release. As part of the manufacturing
process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution.
If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA
together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the
manufacturer’s tests performed on the lot. The FDA also may perform certain confirmatory tests on lots of some products,
such as viral vaccines, before releasing the lots for distribution by the manufacturer. In addition, the FDA conducts
laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological
products.
The FDA may require one or more Phase 4 post-market trials or surveillance to further assess and monitor the
product’s safety and effectiveness after commercialization, and may limit further marketing of the product based on the
results of these post-marketing studies. We also must comply with the FDA’s advertising and promotion requirements,
such as those related to direct-to-consumer advertising, the prohibition on promoting products for uses or in patient
populations that are not described in the product’s approved labeling (known as “off-label use”), industry-sponsored
scientific and educational activities, and promotional activities involving the Internet. Biologics may be marketed only for
the approved indications and in accordance with the provisions of the approved labeling.
Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements
may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible
civil or criminal sanctions. Failure to comply with the applicable U.S. requirements at any time during the product
development process, approval process or after approval, may subject an applicant or manufacturer to administrative or
judicial civil or criminal sanctions and adverse publicity. FDA sanctions could include refusal to approve pending
applications, withdrawal of an approval, clinical hold, warning or untitled letters, product recalls, product seizures, total or
partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective
advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties.
Biological product manufacturers and other entities involved in the manufacture and distribution of approved
biological products are required to register their establishments with the FDA and certain state agencies, and are subject to
periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP requirements and
other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and
quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in
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restrictions on a product, manufacturer, or holder of an approved BLA, including withdrawal of the product from the
market. In addition, changes to the manufacturing process or facility generally require prior FDA approval before being
implemented and other types of changes to the approved product, such as adding new indications and additional labeling
claims, are also subject to further FDA review and approval.
Biosimilars and Exclusivity
The Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated approval
pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological
product. Biosimilarity, which requires that there be no clinically meaningful differences between the biological product
and the reference product in terms of safety, purity, and potency, can be shown through analytical studies, animal studies,
and a clinical trial or trials. Interchangeability requires that a product is biosimilar to the reference product and the product
must demonstrate that it can be expected to produce the same clinical results as the reference product in any given patient
and, for products that are administered multiple times to an individual, the biologic and the reference biologic may be
alternated or switched after one has been previously administered without increasing safety risks or risks of diminished
efficacy relative to exclusive use of the reference biologic. However, complexities associated with the larger, and often
more complex, structures of biological products, as well as the processes by which such products are manufactured, pose
significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA.
Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years
following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar
product may not be made effective by the FDA until 12 years from the date on which the reference product was first
licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference
product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data
from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product. The BPCIA
also created certain exclusivity periods for biosimilars approved as interchangeable products.
A biological product can also obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if
granted, adds six months to existing exclusivity periods and patent terms. This six-month exclusivity, which runs from the
end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric study in
accordance with an FDA-issued “Written Request” for such a study.
Other Healthcare Laws and Compliance Requirements
Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the federal
government and by authorities in the states and foreign jurisdictions in which they conduct their business, which may
constrain the financial arrangements and relationships through which we conduct our research, as well as, sell, market and
distribute any products for which we obtain marketing approval. Such laws include, without limitation, federal and state
anti-kickback, fraud and abuse, false claims and transparency laws and regulations regarding drug pricing and payments or
other transfers of value made to physicians and other licensed healthcare professionals. If their operations are found to be
in violation of any of such laws or any other governmental regulations that apply, they may be subject to penalties,
including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or
restructuring of operations, exclusion from participation in federal and state healthcare programs, integrity oversight and
reporting obligations to resolve allegations of non-compliance and imprisonment.
Coverage and Reimbursement
Significant uncertainty exists as to the coverage and reimbursement status of any pharmaceutical or biological
product for which we obtain regulatory approval. Sales of any product depend, in part, on the extent to which such product
will be covered by third-party payors, such as federal, state, and foreign government healthcare programs,
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commercial insurance and managed healthcare organizations, and the level of reimbursement for such product by third-
party payors. Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-
by-plan basis. For products administered under the supervision of a physician, obtaining coverage and adequate
reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally,
separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be
available, which may impact physician utilization.
In addition, the U.S. government, state legislatures and foreign governments have continued implementing cost-
containment programs, including price controls, restrictions on coverage and reimbursement and requirements for
substitution of generic products. Third party payors are increasingly challenging the prices charged for medical products
and services, examining the medical necessity and reviewing the cost effectiveness of pharmaceutical or biological
products, medical devices and medical services, in addition to questioning safety and efficacy. Adoption of price controls
and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and
measures, could further limit sales of any product. Decreases in third-party reimbursement for any product or a decision by
a third-party payor not to cover a product could reduce physician usage and patient demand for the product.
Healthcare Reform
The United States and some foreign jurisdictions are considering or have enacted a number of reform proposals to
change the healthcare system. There is significant interest in promoting changes in healthcare systems with the stated
goals of containing healthcare costs, improving quality or expanding access. In the United States, the pharmaceutical
industry has been a particular focus of these efforts and has been significantly affected by federal and state legislative
initiatives, including those designed to limit the pricing, coverage, and reimbursement of pharmaceutical and
biopharmaceutical products, especially under government-funded health care programs, and increased governmental
control of drug pricing.
In March 2010, the Patient Protection and Affordable Care Act, or the ACA, was signed into law, which
substantially changed the way healthcare is financed by both governmental and private insurers in the United States, and
significantly affected the pharmaceutical industry. The ACA contained a number of provisions of particular import to the
pharmaceutical and biotechnology industries, including, but not limited to, those governing enrollment in federal
healthcare programs, a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate
Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and annual fees based on
pharmaceutical companies’ share of sales to federal health care programs.
Since its enactment, there have been judicial, Congressional and executive branch challenges to certain aspects of
the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by
several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision,
President Biden issued an executive order to initiate a special enrollment period for purposes of obtaining health insurance
coverage through the ACA marketplace from February 15, 2021 through August 15, 2021. The executive order also
instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to
healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work
requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through
Medicaid or the ACA.
Other legislative changes have been proposed and adopted since the ACA was enacted, including aggregate
reductions of Medicare payments to providers of 2% per fiscal year, which was temporarily suspended from May 1, 2020
through March 31, 2022, and reduced payments to several types of Medicare providers. Moreover, there has recently been
heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which
has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among
other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient
programs, and reform government program reimbursement methodologies for drug products. At
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the state level, legislatures have increasingly passed legislation and implemented regulations designed to control
pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain
product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage
importation from other countries and bulk purchasing.
Additionally, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina
Right to Try Act of 2017, or the Right to Try Act, was signed into law. The law, among other things, provides a federal
framework for certain patients to access certain investigational new drug products that have completed a Phase 1 clinical
trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can seek
treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access
program. There is no obligation for a pharmaceutical manufacturer to make its drug products available to eligible patients
as a result of the Right to Try Act.
U.S. Data Privacy and Security Laws
In the United States, numerous federal and state laws and regulations, including data breach notification laws,
health information privacy and security laws, including the Health Insurance Portability and Accountability Act of 1996, as
amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and regulations
promulgated thereunder, or collectively, HIPAA, and federal and state consumer protection laws and regulations (e.g.,
Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure, and protection of health-
related and other personal information could apply to our operations or the operations of our partners. In addition, certain
state laws, such as the California Consumer Privacy Act, or CCPA, and the California Privacy Rights Act, or CPRA,
govern the privacy and security of personal information, including health-related information in certain circumstances,
some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not
have the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result
in the imposition of significant civil and/or criminal penalties and private litigation. Privacy and security laws, regulations,
and other obligations are constantly evolving, may conflict with each other to make compliance efforts more challenging,
and can result in investigations, proceedings, or actions that lead to significant penalties and restrictions on data processing.
U.S. Foreign Corrupt Practices Act
The U.S. Foreign Corrupt Practices Act of 1977, or FCPA, prohibits U.S. corporations and individuals from
engaging in certain activities to obtain or retain business or secure any improper advantage, or to influence a person
working in an official capacity. It is illegal to pay, offer to pay or authorize the payment of anything of value to any
employee or official of a foreign government or public international organization, or political party, political party official,
or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official
capacity. The scope of the FCPA also includes employees and officials of state-owned or controlled enterprises, which
may include healthcare professionals in many countries. Equivalent laws have been adopted in other foreign countries that
impose similar obligations.
Government Regulation Outside of the United States
In addition to regulations in the United States, we may be subject to a variety of regulations in other jurisdictions,
for instance in the UK or EU, governing, among other things, clinical trials, marketing authorizations, post-marketing
authorization requirements and any commercial sales and distribution of our products. Because biologically sourced raw
materials are subject to unique contamination risks, their use may be restricted in some countries. In addition, ethical,
social and legal concerns about gene therapy, genetic testing, genetic research and gene-editing technology, could result in
additional regulations restricting or prohibiting the processes we may use.
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Whether or not we obtain FDA approval of a product, we must obtain the requisite approvals from regulatory
authorities in foreign countries prior to the commencement of clinical trials or marketing of the product in those countries.
The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary
from country to country. If we fail to comply with applicable foreign regulatory requirements, we may be subject to,
among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating
restrictions and criminal prosecution.
Non-Clinical Studies and Clinical Trials
Similar to the United States, the various phases of non-clinical and clinical research abroad are subject to
significant regulatory controls.
Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or
biological substances. Non-clinical studies must be conducted in compliance with the principles of GLP, as set forth in EU
Directive 2004/10/EC. In particular, non-clinical studies, both in vitro and in vivo, must be planned, performed, monitored,
recorded, reported and archived in accordance with the GLP principles, which define a set of rules and criteria for a quality
system for the organizational process and the conditions for non-clinical studies. These GLP standards reflect the
Organization for Economic Co-operation and Development requirements.
Clinical trials of medicinal products in the EU must be conducted in accordance with EU and national regulations
and the International Conference on Harmonization, or ICH, guidelines on GCPs, as well as the applicable regulatory
requirements and the ethical principles that have their origin in the Declaration of Helsinki. Additional GCP guidelines
from the European Commission, focusing in particular on traceability, apply to clinical trials of ATMPs. If the sponsor of
the clinical trial is not established within the EU, it must appoint an entity within the EU to act as its legal representative.
The sponsor must take out a clinical trial insurance policy, and in most EU member states, the sponsor is liable to provide
‘no fault’ compensation to any study subject injured in the clinical trial.
The regulatory landscape related to clinical trials in the EU has been subject to recent changes. The EU Clinical
Trials Regulation, or CTR, which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became
applicable on January 31, 2022. Unlike directives, the CTR is directly applicable in all EU member states without the need
for member states to further implement it into national law. The CTR notably harmonizes the assessment and supervision
processes for clinical trials throughout the EU via a Clinical Trials Information System, which contains a centralized EU
portal and database.
While the EU Clinical Trials Directive required a separate clinical trial application, or CTA, to be submitted in
each member state in which the clinical trial takes place, to both the competent national health authority and an
independent ethics committee, much like the FDA and IRB respectively, the CTR introduces a centralized process and only
requires the submission of a single application for multi-center trials. The CTR allows sponsors to make a single
submission to both the competent authority and an ethics committee in each member state, leading to a single decision per
member state. The CTA must include, among other things, a copy of the trial protocol and an investigational medicinal
product dossier containing information about the manufacture and quality of the medicinal product under investigation.
The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all member states
concerned, and a separate assessment by each member state with respect to specific requirements related to its own
territory, including ethics rules. Each member state’s decision is communicated to the sponsor via the centralized EU
portal. Once the CTA is approved, clinical study development may proceed.
The CTR foresees a three-year transition period. The extent to which ongoing and new clinical trials will be
governed by the CTR varies. Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the
EU Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted
for the application of the EU Clinical Trials Directive remain governed by the EU Clinical Trials Directive until
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January 31, 2025. After this date, all clinical trials (including those which are ongoing) will become subject to the
provisions of the CTR.
Medicines used in clinical trials must be manufactured in accordance with good manufacturing practices, or GMP.
Other national and EU-wide regulatory requirements may also apply.
During the development of a medicinal product, the EMA and national regulators within the EU provide the
opportunity for dialogue and guidance on the development program. At the EMA level, this is usually done in the form of
scientific advice, which is given by the Scientific Advice Working Party of the Committee for Medicinal Products for
Human Use, or CHMP. A fee is incurred with each scientific advice procedure. Advice from the EMA is typically
provided based on questions concerning, for example, quality (chemistry, manufacturing and controls testing), nonclinical
testing and clinical trials, and pharmacovigilance plans and risk-management programs. Advice is not legally binding with
regard to any future marketing authorization application of the product concerned.
Marketing Authorizations
In the EU, medicinal products can only be placed on the market after obtaining a marketing authorization, or MA.
To obtain regulatory approval of an investigational chemical or biological product in the EU, we must submit a marketing
authorization application, or MAA. The process for doing this depends, among other things, on the nature of the
medicinal product.
“Centralized MAs” issued by the European Commission, based on the opinion of the EMA, are valid across the
entire territory of the EU. The centralized procedure is compulsory for certain types of product candidates, such as:
(i) medicinal products derived from biotechnology processes, such as genetic engineering, (ii) medicinal products
containing a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes,
neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) designated orphan
medicines and (iv) ATMPs, such as gene therapy, somatic cell therapy or tissue-engineered medicines. The centralized
procedure is optional for product candidates containing a new active substance not yet authorized in the EU, or for product
candidates that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public
health in the EU.
The Committee for Advanced Therapies, or CAT, is responsible in conjunction with the CHMP for the evaluation
of advanced therapy medicinal products, or ATMPs. The CAT is primarily responsible for the scientific evaluation of
ATMPs and prepares a draft opinion on the quality, safety and efficacy of each ATMP for which an MAA is submitted.
The CAT’s opinion is then taken into account by the CHMP when giving its final recommendation regarding the
authorization of a product in view of the balance of benefits and risks identified. Although the CAT’s draft opinion is
submitted to the CHMP for final approval, the CHMP may depart from the draft opinion, if it provides detailed scientific
justification. The CHMP and CAT are also responsible for providing guidelines on ATMPs and have published numerous
guidelines, including specific guidelines on gene therapies and cell therapies. These guidelines provide additional
guidance on the factors that the EMA will consider in relation to the development and evaluation of ATMPs and include,
among other things, the preclinical studies required to characterize ATMPs; the manufacturing and control information that
should be submitted in an MAA; and post-approval measures required to monitor patients and evaluate the long term
efficacy and potential adverse reactions of ATMPs. Although these guidelines are not legally binding, we believe that our
compliance with them is likely necessary to gain and maintain approval for any of our product candidates.
Under the centralized procedure, the maximum timeframe for the evaluation of an MAA by the EMA is 210 days.
This excludes so-called clock stops, during which additional written or oral information is to be provided by the applicant
in response to questions asked by the CHMP. At the end of the review period, the CHMP provides an opinion to the
European Commission. If this opinion is favorable, the Commission may then adopt a decision to grant an MA.
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“National MAs” are issued by the competent authorities of the EU member states, only cover their respective
territory, and are available for product candidates not falling within the mandatory scope of the centralized procedure.
Where a product has already been authorized for marketing in an EU member state, this national MA can be recognized in
another member state through the mutual recognition procedure. If the product has not received a national MA in any
member state at the time of application, it can be approved simultaneously in various member states through the
decentralized procedure. Under the decentralized procedure an identical dossier is submitted to the competent authorities of
each of the member states in which the MA is sought, one of which is selected by the applicant as the reference member
state.
MAs have an initial duration of five years. After these five years, the authorization may be renewed on the basis
of a reevaluation of the risk-benefit balance. Once renewed, the MA is valid for an unlimited period unless the European
Commission or the national competent authority decides, on justified grounds relating to pharmacovigilance, to proceed
with one additional five-year renewal
In exceptional cases, the CHMP might perform an accelerated review of an MAA in no more than 150 days (not
including clock stops). Innovative products that target an unmet medical need and are expected to be of major public
health interest may be eligible for a number of expedited development and review programs, such as the PRIME scheme,
which provides incentives similar to the Breakthrough Therapy designation in the U.S. PRIME is a voluntary scheme
aimed at enhancing the EMA’s support for the development of medicines that target unmet medical needs. It is based on
increased interaction and early dialogue with companies developing promising medicines, to optimize their product
development plans and speed up their evaluation to help them reach patients earlier. Product developers that benefit from
PRIME designation can expect to be eligible for accelerated assessment but this is not guaranteed. Many benefits accrue to
sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory
dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and
accelerated MAA assessment once a dossier has been submitted. Importantly, a dedicated contact and rapporteur from the
CHMP is appointed early in the PRIME scheme facilitating increased understanding of the product at EMA’s committee
level. An initial meeting initiates these relationships and includes a team of multidisciplinary experts at the EMA to
provide guidance on the overall development and regulatory strategies.
Moreover, in the EU, the European Commission may grant a so-called “conditional MA” prior to obtaining the
comprehensive clinical data required for an application for a full MA. Such conditional MAs may be granted for product
candidates (including medicines designated as orphan medicinal products), if (i) the risk-benefit balance of the product
candidate is positive, (ii) it is likely that the applicant will be in a position to provide the required comprehensive clinical
trial data, (iii) the product fulfills an unmet medical need and (iv) the benefit to public health of the immediate availability
on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still
required. A conditional MA may contain specific obligations to be fulfilled by the MA holder, including obligations with
respect to the completion of ongoing or new studies, and with respect to the collection of pharmacovigilance data.
Conditional MAs are valid for one year, and may be renewed annually, if the risk-benefit balance remains positive, and
after an assessment of the need for additional or modified conditions and/or specific obligations. The MA can be converted
into a standard MA once the MA holder fulfils the obligations that were imposed and the complete data confirm that the
medicine’s benefits continue to outweigh its risks. The timelines for the centralized procedure described above also apply
with respect to the review by the CHMP of applications for a conditional MA.
The European Commission may also grant a so-called “marketing authorization under exceptional circumstances”.
Such MA is intended for products for which the applicant can demonstrate that it is unable to provide comprehensive data
on the efficacy and safety under normal conditions of use even after the product has been authorized, because the
indications for which the product in question is intended are encountered so rarely that the applicant cannot reasonably be
expected to provide comprehensive evidence, or in the present state of scientific knowledge, comprehensive information
cannot be provided, or it would be contrary to generally accepted principles of
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medical ethics to collect such information. Consequently, MAs under exceptional circumstances may be granted subject to
certain specific obligations, which may include the following:
● the applicant must complete an identified program of studies within a time period specified by the competent
authority, the results of which form the basis of a reassessment of the benefit/risk profile;
● the medicinal product in question may be supplied on medical prescription only and may in certain cases be
administered only under strict medical supervision, possibly in a hospital and in the case of a radio-
pharmaceutical, by an authorized person; and
● the package leaflet and any medical information must draw the attention of the medical practitioner to the
fact that the particulars available concerning the medicinal product in question are as yet inadequate in
certain specified respects.
An MA under exceptional circumstances is subject to annual review to reassess the risk-benefit balance in an
annual reassessment procedure. Continuation of the authorization is linked to the annual reassessment and a negative
assessment could potentially result in the MA being suspended or revoked. The renewal of an MA of a medicinal product
under exceptional circumstances, however, follows the same rules as a “normal” MA. Thus, an MA under exceptional
circumstances is granted for an initial five years, after which the authorization will become valid indefinitely, unless the
EMA decides that safety grounds merit one additional five-year renewal. An MA under exceptional circumstances should
not be granted when a conditional MA is more appropriate.
The EU medicines rules expressly permit the EU member states to adopt national legislation prohibiting or
restricting the sale, supply or use of any medicinal product containing, consisting of or derived from a specific type of
human or animal cell, such as embryonic stem cells. While the products we have in development do not make use of
embryonic stem cells, it is possible that the national laws in certain EU member states may prohibit or restrict us from
commercializing our products, even if they have been granted an MA.
Data and Marketing Exclusivity
The EU also provides opportunities for market exclusivity. Upon receiving MA, reference products generally
receive eight years of data exclusivity and an additional two years of market exclusivity. If granted, data exclusivity
prevents generic or biosimilar applicants from relying on the preclinical and clinical trial data contained in the dossier of
the reference product when applying for a generic or biosimilar MA in the EU during a period of eight years from the date
on which the reference product was first authorized in the EU. The market exclusivity period prevents a successful generic
or biosimilar applicant from commercializing its product in the EU until ten years have elapsed from the initial MA of the
reference product in the EU. The overall ten-year market exclusivity period may be extended to a maximum of eleven
years if during the first eight years of those ten years, the MA holder obtains an authorization for one or more new
therapeutic indications with significant clinical benefit over existing therapies. However, there is no guarantee that a
product will be considered by the EU regulatory authorities to be a new chemical or biological entity, and products may not
qualify for data exclusivity.
There is a special regime for biosimilars, or biological medicinal products that are similar to a reference medicinal
product but that do not meet the definition of a generic medicinal product, for example, because of differences in raw
materials or manufacturing processes. For such products, the results of appropriate preclinical or clinical trials must be
provided, and guidelines from the EMA detail the type of quantity of supplementary data to be provided for different types
of biological product. There are no such guidelines for complex biological products, such as gene or cell therapy medicinal
products, and so it is unlikely that biosimilars of those products will currently be approved in the EU. However, guidance
from the EMA states that they will be considered in the future in light of the scientific knowledge and regulatory
experience gained at the time.
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Orphan Medicinal Products
The criteria for designating an “orphan medicinal product” in the EU are similar in principle to those in the United
States. A medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a
life-threatening or chronically debilitating condition; (2) either (a) such condition affects no more than five in 10,000
persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would
not generate sufficient return in the EU to justify investment; and (3) there exists no satisfactory method of diagnosis,
prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will
be of significant benefit to those affected by the condition.
Orphan drug designation entitles a party to incentives such as reduction of fees or fee waivers, protocol assistance,
and access to the centralized MA procedure. The application for orphan drug designation must be submitted before the
MAA. The applicant will receive a fee reduction for the MAA if the orphan drug designation has been granted, but not if
the designation is still pending at the time the MA is submitted. Upon grant of an MA and assuming the requirement for
orphan designation are also met at the time the MA is granted, orphan medicinal products are entitled to a ten-year period
of market exclusivity for the approved therapeutic indication, which means that regulatory authorities cannot accept
another MA or grant an MA or accept an application to extend an existing MA in respect of a similar medicinal product for
the same indication for a period of ten years. The period of market exclusivity is extended by two years for orphan
medicinal products that have also complied with an agreed pediatric investigation plan, or PIP. Orphan drug designation
does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.
The ten-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the
product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to
justify maintenance of market exclusivity or where the prevalence of the condition has increased above the orphan
designation threshold. Additionally, an MA may be granted to a similar product for the same indication at any time if (1)
the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior,
(2) the applicant consents to a second orphan medicinal product application; or (3) the applicant cannot supply enough
orphan medicinal product.
Pediatric Development
In the EU, MAAs for new medicinal products have to include the results of trials conducted in the pediatric
population, in compliance with a PIP agreed with the EMA’s Pediatric Committee, or PDCO. The PIP sets out the timing
and measures proposed to generate data to support a pediatric indication of the drug for which an MA is being sought. The
PDCO can grant a deferral of the obligation to implement some or all of the measures of the PIP until there are sufficient
data to demonstrate the efficacy and safety of the product in adults. Further, the obligation to provide pediatric clinical trial
data can be waived by the PDCO when these data are not needed or appropriate because the product is likely to be
ineffective or unsafe in children, the disease or condition for which the product is intended occurs only in adult
populations, or when the product does not represent a significant therapeutic benefit over existing treatments for pediatric
patients. Once the MA is obtained in all EU member states and study results are included in the product information, even
when negative, the product is eligible for a six-months supplementary protection certificate extension (if any is in effect at
the time of approval) or, in the case of orphan medicinal products, a two year extension of the orphan market exclusivity is
granted.
Post-Approval Requirements
Similar to the United States, both MA holders and manufacturers of medicinal products are subject to
comprehensive regulatory oversight by the EMA, the European Commission and/or the competent regulatory authorities of
the member states. The holder of an MA must establish and maintain a pharmacovigilance system and appoint an
individual qualified person for pharmacovigilance who is responsible for oversight of that system. Key obligations
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include expedited reporting of suspected serious adverse reactions and submission of periodic safety update reports, or
PSURs.
All new MAAs must include a risk management plan, or RMP, describing the risk management system that the
company will put in place and documenting measures to prevent or minimize the risks associated with the product. The
regulatory authorities may also impose specific obligations as a condition of the MA. Such risk-minimization measures or
post-authorization obligations may include additional safety monitoring, more frequent submission of PSURs, or the
conduct of additional clinical trials or post-authorization safety studies.
The advertising and promotion of medicinal products is also subject to laws concerning promotion of medicinal
products, interactions with physicians, misleading and comparative advertising and unfair commercial practices. All
advertising and promotional activities for the product must be consistent with the approved summary of product
characteristics, and therefore all off-label promotion is prohibited. Direct-to-consumer advertising of prescription
medicines is also prohibited in the EU. Although general requirements for advertising and promotion of medicinal
products are established under EU directives, the details are governed by regulations in each member state and can differ
from one country to another.
Failure to comply with EU and member state laws that apply to the conduct of clinical trials, manufacturing
approval, MA of medicinal products and marketing of such products, both before and after grant of the MA, manufacturing
of pharmaceutical products, statutory health insurance, bribery and anti-corruption or with other applicable regulatory
requirements may result in administrative, civil or criminal penalties. These penalties could include delays or refusal to
authorize the conduct of clinical trials or to grant MA, product withdrawals and recalls, product seizures, suspension,
withdrawal or variation of the MA, total or partial suspension of production, distribution, manufacturing or clinical trials,
operating restrictions, injunctions, suspension of licenses, fines and criminal penalties.
The aforementioned EU rules are generally applicable in the European Economic Area, or EEA, which consists of
the 27 EU member states plus Iceland, Liechtenstein and Norway.
Pricing and Reimbursement
Even if a medicinal product obtains an MA in the EU, there can be no assurance that reimbursement for such
product will be secured on a timely basis or at all. Governments influence the price of medicinal products through their
pricing and reimbursement rules and control of national healthcare systems that fund a large part of the cost of those
products to consumers. Member states are free to restrict the range of pharmaceutical products for which their national
health insurance systems provide reimbursement, and to control the prices and reimbursement levels of pharmaceutical
products for human use. Some jurisdictions operate positive and negative list systems under which products may only be
marketed once a reimbursement price has been agreed to by the government. Member states may approve a specific price
or level of reimbursement for the pharmaceutical product, or alternatively adopt a system of direct or indirect controls on
the profitability of the company responsible for placing the pharmaceutical product on the market, including volume-based
arrangements, caps and reference pricing mechanisms. To obtain reimbursement or pricing approval, some of these
countries may require the completion of clinical trials that compare the cost-effectiveness of a particular product candidate
to currently available therapies. Other EU member states allow companies to fix their own prices for medicines, but
monitor and control company profits. The downward pressure on healthcare costs in general, particularly prescription
medicines, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.
In addition, in some countries, cross border imports from low-priced markets exert a commercial pressure on pricing within
a country.
Brexit and the Regulatory Framework in the United Kingdom
The UK formally left the EU on January 31, 2020, commonly referred to as “Brexit”. Since the end of the Brexit
transition period on January 1, 2021, Great Britain (England, Scotland and Wales) has not been directly subject to
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EU laws, however under the terms of the Protocol on Ireland and Northern Ireland, EU laws have generally applied to
Northern Ireland. On February 27, 2023, the UK Government and the European Commission reached a political agreement
on the “Windsor Agreement” which may revise the Protocol on Ireland and Northern Ireland in order to address some of
the perceived shortcomings in its operation. Under the proposed changes, Northern Ireland would be reintegrated under the
regulatory authority of the MHRA with respect to medicinal products. These proposed changes need to be codified and
agreed by the respective parliaments of the UK and EU before taking effect.
UK Clinical Trials
It is currently unclear to what extent the UK will seek to align its regulations with the EU. The UK regulatory
framework in relation to clinical trials is derived from existing EU legislation (as implemented into UK law, through
secondary legislation), and after Brexit, EU laws on clinical trials (including the CTR) are no longer directly applicable in
Great Britain (i.e., the UK excluding Northern Ireland). On January 17, 2022, the MHRA launched an eight-week
consultation on reframing the UK legislation for clinical trials. The consultation closed on March 14, 2022 and aims to
streamline clinical trials approvals, enable innovation, enhance clinical trials transparency, enable greater risk
proportionality, and promote patient and public involvement in clinical trials. The outcome of the consultation is being
closely watched and will determine whether the UK chooses to align with the CTR or diverge from it to maintain
regulatory flexibility. Under the terms of the Protocol on Ireland and Northern Ireland, provisions of the CTR which relate
to the manufacture and import of investigational medicinal products and auxiliary medicinal products currently apply in
Northern Ireland. On February 27, 2023, the UK Government and the European Commission reached a political agreement
on the “Windsor Agreement” which may revise the Protocol on Ireland and Northern Ireland in order to address some of
the perceived shortcomings in its operation. If implemented, this may have further impact on the application of the CTR in
Northern Ireland.
UK Marketing Authorizations
The MHRA is now the UK’s standalone regulator for MAAs. All existing centralized procedure MAs were
automatically converted into UK MAs effective in Great Britain and issued with a UK MA number on January 1, 2021
(unless MA holders opted out of this scheme by January 21, 2021). As a result of the implementation of the Protocol on
Ireland and Northern Ireland, centralized procedure MAs remain valid for marketing products in Northern Ireland. Pending
applications which were submitted to EMA prior to the end of the transition period will either be determined in parallel by
the MHRA, or will be put “on hold” until the CHMP issues a positive decision which can be relied upon by the MHRA.
Converted EU MAs will be treated as if they were granted on the date the corresponding centralized procedure MA was
granted and the renewal date will stay the same. If renewals were submitted and no decision was rendered before January
1, 2021, the MHRA will ensure the renewal process is concluded and processed appropriately, and there will be no need to
resubmit the application. From January 1, 2021 the requirements for renewal submissions remain the same as required by
the EMA and the MA holders should continue to submit renewal applications to the MHRA nine months before they expire
(or six months in relation to conditional MAs).
Following January 1, 2021, an applicant for a centralized procedure MA must be established in the EU. After this
date, companies established in the UK can no longer use the centralized procedure and instead must follow one of the UK
national authorization procedures or one of the remaining post-Brexit international cooperation procedures (such as the
Access Consortium) to obtain an MA to market products in the UK. In addition, for a two-year period from January 1,
2021, MHRA may rely on a decision taken by the European Commission on the approval of a new centralized procedure
MA when determining an application for a Great Britain MA; or use the MHRA’s decentralized or mutual recognition
procedures which enable MAs approved in EU member states (or Iceland, Liechtenstein, Norway) to be granted in Great
Britain. Additionally, the ‘Unfettered Access Procedure’ enables MA holders in Northern Ireland to seek recognition in
Great Britain. Post Brexit, the MHRA has updated various aspects of the regulatory regime for medicines in the UK,
including: introducing the Innovative Licensing and Access Procedure to accelerate the time to market and facilitate patient
access for innovative medicines; updates to the UK national approval procedure,
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introducing a 150-day objective for assessing applications for MAs in the UK, Great Britain and Northern Ireland and a
rolling review process for MA applications (rather than a consolidated full dossier submission).
UK Orphan Designation
Post-Brexit, the UK has retained the EU Regulation which governs the designation of medicinal products as
orphan medicinal products and which establishes incentives thereto (Regulation (EC) No. 141/2000) as part of UK law by
virtue of the EU (Withdrawal) Act 2018. However under the Retained EU Law (Revocation and Reform) Bill, which is
currently before the UK Parliament, unless this legislation is expressly preserved and “assimilated” into domestic law or
extended by ministerial regulations (to no later than June 23, 2026) it will automatically expire and be revoked by
December 31, 2023. There is therefore uncertainty about the future regulations relating to orphan designation in Great
Britain, and any future changes to the legal requirements could lead to greater regulatory complexity and increased costs to
our business.
The MHRA is responsible for reviewing applications from companies for orphan designation at the time of a
MAA. If a medicinal product has been designated orphan in the EU under Regulation (EC) 141/2000, a Great Britain
orphan MAA can be made under regulation 50G of the Human Medicines Regulation 2012 (as amended). A UK-wide
orphan MAA can only be considered in the absence of an active EU orphan designation.
If a UK-wide orphan MA is granted and the medicinal product subsequently receives EU orphan designation, the
MA holder would need to submit a variation to change this to a Great Britain orphan MA.
UK Specials Regulation
The UK’s Human Medicines Regulations 2012 allow for the manufacture and supply of medicinal products not
authorized for marketing to patients with special needs at the request of the healthcare professional responsible for the
patient’s care (these products are referred to as “specials”). A special may only be supplied: (i) in response to an
unsolicited order from a healthcare professional responsible for the care of the patient, (ii) if the product is manufactured
and assembled in accordance with the specifications of that healthcare professional to fulfil the special needs of the
individual patient which cannot be met by products already authorized for marketing, and (iii) if the product is
manufactured under a specials license granted by the UK’s MHRA.
Manufacturing a special also imposes a five year record retention requirement subject to review by the MHRA,
including details of any suspected adverse reaction to the product so sold or supplied of which the person is aware or
subsequently becomes aware, as well as a continuing obligation to notify the MHRA of any suspected adverse reaction to
the medicinal product which is a serious adverse reaction.
Privacy and Data Protection Laws
We are also subject to laws and regulations in non-U.S. countries in which we are established or in which we run
clinical trials, as well as countries in which we may sell, market and distribute products for which we obtain marketing
approval. These laws and regulations cover data privacy and the protection of health-related and other personal data. Laws
and regulations in the EU and other jurisdictions apply broadly to the collection, use, storage, disclosure, processing and
security of personal data, and have generally become more stringent over time.
For example, the General Data Protection Regulation, or GDPR, imposes strict requirements for processing the
personal data of individuals within the EEA. The GDPR allows EU member states to make additional laws and regulations
further regulating the processing of genetic, biometric or health data. Failure to comply with the requirements of GDPR
and the applicable national data protection laws of the EU member states may result in fines of up to €20 million or up to
4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative
penalties and may expose us to compensation claims from affected individuals.
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Further, from January 1, 2021, we are subject to the GDPR and also the UK GDPR, which, together with the
amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the
GDPR, e.g. fines up to the greater of £17.5 million or 4% of the total worldwide annual turnover of the preceding financial
year. The European Commission has adopted an adequacy decision in favor of the UK, enabling data transfers from EU
member states to the UK without additional safeguards. However, the UK adequacy decision will automatically expire in
June 2025 unless the European Commission re-assesses and renews/extends that decision, and it continues to remain under
review by the Commission during this period.
Employees
As of December 31, 2022, we had 358 employees, 343 of which are full-time employees. None of our employees
is subject to a collective bargaining agreement or represented by a trade or labor union. We consider our relationship with
our employees to be good.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and
integrating our existing and new employees, advisors and consultants. The principal purposes of our equity incentive plans
are to attract, retain and reward personnel through the granting of equity-based compensation awards in order to increase
shareholder value and the success of our company by motivating such individuals to perform to the best of their abilities
and achieve our objectives.
Corporate Information
MeiraGTx Holdings plc was formed on May 1, 2018 under the laws of the Cayman Islands. Our predecessor,
MeiraGTx Limited, a limited company under the laws of England and Wales, was formed on March 20, 2015. In
connection with our initial public offering (“IPO”), we reorganized whereby MeiraGTx Limited became a wholly owned
subsidiary of MeiraGTx Holdings plc.
Available Information
Our website can be found at http://www.meiragtx.com. From time to time, we may use our website as a channel of
distribution of material company information. Financial and other material information is routinely posted and accessible
under the Investors and Media section of our website at http://www.meiragtx.com.
We file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and
Exchange Commission (“SEC”). Our SEC filings are available to the public over the Internet at the SEC’s website at
http://www.sec.gov. Our SEC filings are also available without charge under the Investors and Media section of our website
at http://www.meiragtx.com. We make this information available on our website as soon as reasonably practicable after we
electronically file such information with, or furnish it to, the SEC. Our website and the information contained on or
connected to that site are not incorporated into this Form 10-K.
ITEM 1A.
RISK FACTORS
Investing in our ordinary shares involves a high degree of risk. You should consider carefully the risks described below,
together with the other information included or incorporated by reference in this Form 10-K. If any of the following risks
occur, our business, financial condition, results of operations and future growth prospects could be materially and
adversely affected. In these circumstances, the market price of our ordinary shares could decline. Other events that we do
not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition
and results of operations, particularly in light of the continually evolving nature of the COVID-19 pandemic, containment
measures, vaccine distribution, vaccination rates, new variants and the related impacts to economic and operating
conditions.
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Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant losses since inception and anticipate that we will incur continued losses for the foreseeable
future, and may never achieve or maintain profitability.
We are a clinical stage company with limited operating history. We were formed and began operations in 2015.
We have never been profitable and do not expect to be profitable in the foreseeable future. We have incurred net losses
since inception, including net losses of approximately $129.6 million and $79.6 million for the twelve months ended
December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of approximately
$470.2 million. Since our inception, we have devoted substantially all of our resources to developing our technology
platform, establishing our viral vector manufacturing facilities and plasmid and DNA production facility, developing
manufacturing processes, advancing the product candidates in our ophthalmology, salivary gland and neurodegenerative
disease programs, research and development activities, building our intellectual property portfolio, organizing and staffing
our company, developing our business plans, raising capital, securing debt financing and providing general and
administrative support for these operations. We have not yet demonstrated an ability to successfully complete large-scale,
pivotal clinical trials, obtain marketing approval, manufacture product at a commercial scale, or arrange for a third party to
do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Given
the length of time typically needed to develop a new drug from the time it enters Phase 1 clinical trials to when it is
approved for treating patients, predictions about our future success or viability may not be as accurate as they could be if
we had a longer operating history or a history of successfully developing and commercializing genetic medicine products.
We expect to continue to incur significant expenses and additional operating losses for the foreseeable future as
we seek to advance product candidates through preclinical and clinical development, expand our research, development
and manufacturing activities, develop new product candidates, build and expand our intellectual product portfolio,
complete clinical trials, seek regulatory approval and, if we receive regulatory approval, commercialize our products.
Furthermore, the costs of advancing product candidates into each succeeding clinical phase tend to increase substantially
over time, including the ongoing Phase 3 Lumeos clinical trial of botaretigene sparoparvovec for the treatment of patients
with XLRP, although we believe that certain of these increases will be partially offset by the research funding in connection
with the Collaboration Agreement. In addition, we expect to continue incurring increasing research and development costs
associated with our clinical activities for AAV-hAQP1 for the treatment of radiation-induced xerostomia and xerostomia
associated with Sjogren’s syndrome, as well as for AAV-GAD for the treatment of Parkinson’s disease. The total costs to
advance any of our product candidates to marketing approval in even a single jurisdiction would be substantial. Because of
the numerous risks and uncertainties associated with gene therapy product development, we are unable to accurately
predict the timing or amount of increased expenses or whether we will be able to begin generating revenue from the
commercialization of products or achieve or maintain profitability. Our expenses have and will continue to increase
substantially as a public company and as we continue to add clinical, scientific, operational, financial, manufacturing,
compliance and management information systems and personnel, including personnel to support our product development,
manufacturing and planned future commercialization efforts.
Before we generate any revenue from product sales, each of our programs and product candidates will require
additional preclinical and/or clinical development, potential regulatory approval in multiple jurisdictions, manufacturing,
building of a commercial organization, substantial investment and significant marketing efforts. Our expenses could
increase beyond expectations if we are required by the FDA, MHRA, EMA, or other regulatory authorities to perform
preclinical studies and clinical trials in addition to those that we currently anticipate. These risks are further described
under “—Risks Related to Discovery, Development, Clinical Testing, Manufacturing and Regulatory Approval” and “—
Risks Related to Commercialization.” As a result, we expect to continue to incur net losses for the foreseeable future.
These net losses have had, and will continue to have, an adverse effect on our shareholders’ equity and working capital.
As we continue to build our business, we expect our financial condition and operating results may fluctuate
significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control.
Accordingly, you should not rely upon the results of any particular quarterly or annual period as indications of future
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operating performance. If we are unable to develop and commercialize one or more of our product candidates either alone
or with collaborators, or if revenues from any product candidate that receives marketing approval are insufficient, we will
not achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability. If we
are unable to achieve and then maintain profitability, the value of our equity securities will be adversely affected.
We will require additional capital to fund our operations, which may not be available on acceptable terms, if at all.
We expect to spend substantial amounts to complete the development of, seek regulatory approvals for and
commercialize our product candidates, as well as continue to expand our manufacturing and supply chain capabilities. This
will require additional capital, which we may raise through equity offerings, debt financings, marketing and distribution
arrangements and other collaborations, strategic alliances and licensing arrangements or other sources. Our ability to raise
additional capital when needed has been and may in the future be adversely affected by external factors beyond our control,
including changes in the political climate, geopolitical actions, changes in market interest rates, potential reforms and
changes to government regulations, the effect of healthcare reform legislation, including those that may limit pricing of
pharmaceutical products and drugs, market prices and conditions, prospects for favorable or unfavorable clinical trial
results, new product initiatives, the manufacturing and distribution of new products, product safety and efficacy issues, new
collaborations, strategic alliances and licensing arrangements, and the COVID-19 outbreak and mitigation measures.
Furthermore, we expect to continue to incur costs associated with operating as a public company. Adequate additional
financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would
have a negative effect on our financial condition and our ability to pursue our business strategy. In addition, attempting to
secure additional financing has diverted and may in the future divert the time and attention of our management from day-
to-day activities and harm our product candidate development efforts. If we are unable to raise capital when needed or on
acceptable terms, we would be forced to delay, reduce or eliminate certain of our research and development programs.
Our operations have consumed significant amounts of cash since inception. As of December 31, 2022, our cash
and cash equivalents were $115.5 million. In addition, we expect to receive $21.3 million in receivables which we expect
to collect in the first quarter of 2023 from Janssen in connection with the Collaboration Agreement. Based on our cash and
cash equivalents at December 31, 2022 and the research funding and milestone payments we expect to receive under the
Collaboration Agreement, we estimate that such funds will be sufficient to enable us to fund our operating expenses and
capital expenditure requirements into the fourth quarter of 2024. This estimate is based on assumptions that may prove to
be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances could
cause us to spend more than expected or consume capital significantly faster than we currently anticipate, such as inflation
or other factors that may significantly increase our business costs. Because the length of time and activities associated with
successful development of our product candidates is uncertain, we are unable to estimate the actual funds we will require
for development and any approved marketing and commercialization activities. Our future funding requirements, both near
and long-term, will depend on many factors, including, but not limited to:
● the progress, timing, costs and results of our ongoing clinical development for our X-linked retinitis
pigmentosa product candidate, botaretigene sparoparvovec, including the ongoing Phase 3 Lumeos
clinical trial of botaretigene sparoparvovec for the treatment of patients with XLRP, for our CNGB3
achromatopsia gene therapy product candidate, AAV-CNGB3, for our CNGA3 achromatopsia gene
therapy product candidate, AAV-CNGA3, for our RPE65-associated retinal dystrophy product candidate,
AAV-RPE65, and to continue to conduct our ongoing natural history studies for inherited retinal
diseases, or IRDs;
● the progress, timing, costs and results of our clinical development for our radiation-induced xerostomia
product candidate, AAV-hAQP1, and for our product candidate for the treatment of Parkinson’s disease,
AAV-GAD;
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● the development of our product candidate for the treatment of ALS, AAV-UPF1, for our product
candidate for the treatment of xerostomia associated with Sjogren’s syndrome, AAV-hAQP1, and our
product candidate for the treatment of neovascular age related macular degeneration, or wet AMD;
● the development of potentially transformative gene regulation technology designed to precisely and
specifically control gene therapy expression levels via dose-response to orally delivered small
molecules;
● continuing our current research programs and our preclinical development of product candidates from
our current research programs;
● seeking to identify, assess, acquire and/or develop additional research programs and additional product
candidates;
● the preclinical testing and clinical trials for any product candidates we identify and develop;
● the outcome, timing and cost of meeting regulatory requirements established by the FDA, MHRA, EMA
and other regulatory authorities;
● the cost of expanding and protecting our intellectual property portfolio, including filing, prosecuting,
defending and enforcing our patent claims and other intellectual property rights;
● the cost of defending potential intellectual property disputes, including patent infringement actions
brought by third parties against us or any of our product candidates;
● the effect of competing technological and market developments;
● the cost of further developing and scaling our manufacturing facilities and processes;
● the cost and timing of completion of commercial-scale manufacturing facilities and activities;
● the cost of making royalty, milestone or other payments under current and any future in-license
agreements;
● our ability to establish and maintain strategic collaborations, licensing or other agreements and the
financial terms of such agreements;
● the extent to which we in-license or acquire rights to other products, product candidates and
technologies;
● the cost of establishing sales, marketing and distribution capabilities for our product candidates in
regions where we choose to commercialize our products; and
● the initiation, progress, timing and results of our commercialization of our product candidates, if
approved for commercial sale.
Raising additional capital through the sale of equity or convertible debt securities will dilute your ownership
interest, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a
shareholder. For example, in connection with entering into the Financing Agreement (as defined below), we issued
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warrants to Perceptive (as defined below), to purchase 400,000 ordinary shares at an exercise price of $15.00 per share and
300,000 ordinary shares at an exercise price of $20.00 per share. Additional debt financing or preferred equity financing, if
available, may involve agreements that include covenants further limiting or restricting our ability to take specific actions,
such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through
collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be
required to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on
terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when
needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization
efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market
ourselves.
We may not have sufficient cash flows or cash on hand to satisfy our debt obligations or covenants under our financing
arrangements, or we may not be able to effectively manage our business in compliance with such covenants.
On August 2, 2022, we, as borrower, and our wholly-owned subsidiaries MeiraGTx UK II Limited and MeiraGTx
Ireland DAC, as guarantors (the “Subsidiary Guarantors”), entered into a senior secured financing arrangement (the
“Financing Agreement”) by and among us, the Subsidiary Guarantors, the lenders and other parties from time to time party
thereto and Perceptive Credit Holdings III, LP, as administrative agent and lender (“Perceptive”). On December 19, 2022,
the Financing Agreement was converted to a note purchase agreement (the “Note Purchase Agreement”) between the same
parties and under substantially the same terms and conditions as the Financing Agreement, subject to certain customary
note constitution terms. The Note Purchase Agreement provides for an initial $75 million notes issuance (the “Tranche 1
Notes”), and we may request an additional $25 million notes issuance to be made at Perceptive’s sole discretion before
August 2, 2024 (the “Tranche 2 Notes”, together with the Tranche 1 Notes, the “Notes”). The Notes incur interest, subject
to certain provisions therein, at a fluctuating rate per annum equal to 10.00% plus the secured overnight financing rate
administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor. The Note Purchase
Agreement matures on August 2, 2026 and is interest-only during the term. The Note Purchase Agreement also contains
various restrictions and covenants, including, among other things, covenants regarding the incurrence of additional
indebtedness, limitations on liens, limitations on certain investments, limitations on making distributions, dividends and
other payments, mergers, consolidations and acquisitions, dispositions of assets, maintenance of at least $3.0 million in a
U.S. bank account, transactions with affiliates, changes to governing documents, changes to certain agreements and leases
and changes in control. Our obligations under the Note Purchase Agreement are secured by our London, UK and Shannon,
Ireland manufacturing facilities, $3.0 million of our cash and the bank accounts of the Subsidiary Guarantors, and the
issued and outstanding equity interests of the Subsidiary Guarantors.
There can be no assurance that Perceptive will elect to issue the Tranche 2 Notes or that our cash and cash
equivalents available under the Note Purchase Agreement and under any future financings, together with any funds
generated by our operations, will be sufficient to satisfy our debt payment obligations. Our inability to generate funds,
obtain financing sufficient to satisfy our debt payment obligations or remain in compliance with the debt covenants may
result in such obligations being accelerated by our lenders, which would likely have a material adverse effect on our
business, financial condition and results of operations.
The covenants may restrict our current and future operations, particularly our ability to respond to certain changes
in our business or industry, or take future actions. Additionally, our ability to comply with these restrictive covenants may
be impacted by events beyond our control, such as economic conditions or major central bank policy actions. Our Note
Purchase Agreement provides that our breach or failure to satisfy certain covenants constitutes an event of default. Upon
the occurrence of an event of default, in addition to an increase in the rate of interest on the Notes of 3% per annum,
Perceptive could elect to declare all amounts outstanding thereunder to be immediately due and payable, proceed against
the assets we provided as collateral, and, if such debt were accelerated, we may not have sufficient cash on hand or be able
to sell sufficient collateral to repay it, which would have an immediate adverse effect on our business and operating results.
This could potentially cause us to cease operations and result in a complete loss of your investment in our ordinary shares.
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We are heavily dependent on the success of our Most Advanced Product Candidates, which are still in development, and
if none of them receive regulatory approval or are successfully commercialized, our business may be harmed.
Our future success and ability to generate product revenue is substantially dependent on our ability to successfully
develop, obtain regulatory approval for and successfully commercialize our product candidates. We currently have no
products that are approved for commercial sale and may never be able to develop marketable products. We have invested
and expect to continue to invest a meaningful portion of our efforts and expenditures over the next few years in the
development of botaretigene sparoparvovec, AAV-GAD, AAV-CNGB3, AAV-CNGA3, AAV-RPE65 and AAV-hAQP1 (the
“Most Advanced Product Candidates”), which will require additional clinical development, management of clinical and
manufacturing activities, regulatory approval in multiple jurisdictions, manufacturing sufficient supply, building of a
commercial organization, substantial investment and significant marketing efforts before we can generate any revenues
from any commercial sales. While we have entered into a Collaboration Agreement with Janssen with respect to AAV-
CNGB3, AAV-CNGA3 and botaretigene sparoparvovec, pursuant to which we received a $100 million upfront payment
and will also receive funding for certain research, manufacturing, clinical development and commercialization costs,
potential additional milestone payments upon the achievement of such milestones and royalties on future net sales of
products, there can be no assurance that these three product candidates will be successfully developed and commercialized
by us and Janssen. We cannot be certain that our Most Advanced Product Candidates will be successful in clinical trials,
receive regulatory approval or be successfully commercialized even if we receive regulatory approval. Even if we receive
approval to market our Most Advanced Product Candidates from the FDA, MHRA or other regulatory bodies, we cannot
be certain that our product candidates will be successfully commercialized by us or our collaborators, widely accepted in
the marketplace or more effective than other commercially available alternatives. Additionally, the research, testing,
manufacturing, labeling, approval, sale, marketing and distribution of gene therapy products are and will remain subject to
extensive and evolving regulation by the FDA, MHRA and other regulatory authorities. We are not permitted to market our
Most Advanced Product Candidates in the United States until they receive approval of a biologics license application, or
BLA, from the FDA, we cannot market them in the UK or EU until we receive approval for an MA, from the MHRA or
European Commission, respectively, and we cannot market them in other countries until we receive any other required
regulatory approval in those countries.
Because some of our other product candidates are based on similar technology as our Most Advanced Product
Candidates, if any of our product candidates show unexpected adverse events or a lack of efficacy in the indications we
intend to treat, or if we experience other regulatory or developmental issues, our development plans and business could be
significantly harmed. Further, competitors may be developing products with similar technology and may experience
problems with their products that could identify problems that would potentially harm our business.
We may not be successful in our efforts to identify additional product candidates.
Part of our strategy involves identifying novel product candidates. The process by which we identify product
candidates may fail to yield product candidates for clinical development for a number of reasons, including those discussed
in these risk factors and also:
● we may not be able to assemble sufficient resources to acquire or discover additional product candidates;
● competitors may develop alternatives that render our potential product candidates obsolete or less
attractive;
● potential product candidates we develop may nevertheless be covered by third parties’ patents or other
exclusive rights;
● potential product candidates may, on further study, be shown to have harmful side effects, toxicities or
other characteristics that indicate that they are unlikely to be products that will receive marketing
approval and achieve market acceptance;
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● potential product candidates may not be effective in treating their targeted diseases;
● the market for a potential product candidate may change so that the continued development of that
product candidate is no longer reasonable;
● a potential product candidate may not be capable of being produced in commercial quantities at an
acceptable cost, or at all; or
● the regulatory pathway for a potential product candidate may be too complex and difficult to navigate
successfully or economically.
In addition, we may choose to focus our efforts and resources on a potential product candidate that ultimately
proves to be unsuccessful. As a result, we may fail to capitalize on viable commercial products or profitable market
opportunities, be required to forego or delay pursuit of opportunities with other product candidates or other diseases that
may later prove to have greater commercial potential, or relinquish valuable rights to such product candidates through
collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to retain
sole development and commercialization rights. If we are unable to identify additional suitable product candidates for
clinical development, this would adversely impact our business strategy and our financial position and share price and
could potentially cause us to cease operations.
Risks Related to Discovery, Development, Clinical Testing, Manufacturing and Regulatory Approval
COVID-19 has impacted and may continue to impact our business, and any other pandemic, epidemic or outbreak of an
infectious disease may materially and adversely impact our business, including our preclinical studies, clinical trials,
manufacturing capabilities and regulatory approvals.
As a result of the COVID-19 pandemic, we have at times restricted onsite activities and have also experienced
some delays in enrolling, treating and monitoring patients in our clinical trials, as well as limited supply chain disruptions.
We may experience these or other disruptions from the COVID-19 pandemic or other pandemic, epidemic or outbreak of
an infectious disease that could severely impact our business, preclinical studies, clinical trials and laboratory and
manufacturing activities, including, for example, delays or difficulties in enrolling patients in our clinical trials, delays or
difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff,
diversion of healthcare resources away from the conduct of clinical trials, interruption of key clinical trial activities due to
limitations on travel imposed or recommended by regulatory authorities or others, interruption or delays in the operations
of the FDA, MHRA, EMA or other regulatory authorities, interruption of, or delays in, the manufacturing of our product
candidates, interruptions in preclinical studies due to restricted or limited operations at our laboratory facilities, limitations
on employee resources that would otherwise be focused on the conduct of our preclinical studies and clinical trials, and
interruption or delays to our sourced discovery and clinical activities.
The COVID-19 pandemic continues to impact businesses globally. The extent to which the outbreak or any
variants may further impact our business, preclinical studies, clinical trials and laboratory and manufacturing activities will
depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration
of the pandemic, the timing, distribution and effectiveness of vaccines, vaccination rates, travel restrictions and physical
distancing requirements in the countries where we do business, business closures or business disruptions, and the
effectiveness of actions taken in the countries where we do business to contain and treat the disease, respond to the
reduction in global economic activity and resume normal economic and operating conditions. If we or any of the third
parties with whom we engage experience prolonged shutdowns or other business disruptions, our ability to conduct our
business in the manner and on the timelines presently planned could be materially and negatively impacted. Furthermore,
the magnitude of the economic impact of COVID-19 pandemic and its variants including sustained inflation, supply chain
disruptions, and major central bank policy actions continues to be difficult to assess or predict and may continue to result in
significant disruption of global financial markets, which could materially affect our performance, financial condition,
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results of operations, and cash flows, as well as our ability to raise additional capital. Additionally, major central bank
policy actions may have a negative impact on our payment obligations under the Note Purchase Agreement.
It is difficult to predict the time and cost of product candidate development on our novel gene therapy platform. Very few
gene therapies have been approved in the United States or in Europe.
We have concentrated a portion of our research and development efforts on our gene therapy platform, which uses
both transduction and gene control technology. Our future success depends on the successful development of these novel
therapeutic approaches. To date, very few products that utilize gene transfer have been approved in the United States or
Europe.
Our gene therapy platform is based on a suite of viral vectors which we can deploy with gene therapy constructs,
which relies on the ability of AAV to efficiently transmit a therapeutic gene to certain kinds of cells. The mechanism of
action by which these vectors target particular tissues is still not completely understood. Therefore, it is difficult for us to
determine that our vectors will be able to properly deliver gene transfer constructs to enough tissue cells to reach
therapeutic levels. We cannot be certain that animal models will exist for some of the diseases we expect to pursue, that our
viral vectors will be able to meet safety and efficacy levels needed to be therapeutic in humans or that they will not cause
significant adverse events or toxicities. Furthermore, prior work conducted by a third party in non-human primates suggests
that intravenous, or IV, delivery of certain AAV vectors at very high doses may result in severe toxicity. The indications
that we target do not use IV administration for viral vector delivery and do not use doses as high as those tested in these
publications, and to date we have not observed the severe toxicities described in these publications with the naturally
occurring AAV vectors that we use. However, we cannot be certain that we will be able to avoid triggering toxicities in our
future preclinical studies or clinical trials. Any such results could impact our ability to develop a product candidate. As a
result of these factors, it is more difficult for us to predict the time and cost of product candidate development, and we
cannot predict whether the application of our gene therapy platform, or any similar or competitive gene therapy platforms,
will result in the identification, development, and regulatory approval of any product candidates, or that other gene therapy
technologies will not be considered better or more attractive. There can be no assurance that any development problems we
experience in the future related to our gene therapy platform or any of our research programs will not cause significant
delays or unanticipated costs, or that such development problems can be solved. Any of these factors may prevent us from
completing our preclinical studies or clinical trials or commercializing any product candidates we may develop on a timely
or profitable basis, if at all.
In addition, because our gene regulation technology is still in the research stage, we have not yet been able to
assess safety in humans, and there may be long-term effects from treatment that we cannot predict at this time.
Because gene therapy is novel and the regulatory landscape that governs any product candidates we may develop is
uncertain and may change, we cannot predict the time and cost of obtaining regulatory approval, if we receive it at all,
for any product candidates we may develop.
The regulatory requirements that will govern any novel gene therapy product candidates we develop are not
entirely clear and may change. Within the broader genetic medicine field, very few therapeutic products have received
marketing authorization from the FDA, MHRA and European Commission. Even with respect to more established products
that fit into the categories of gene therapies or cell therapies, the regulatory landscape is still developing. Regulatory
requirements governing gene therapy products and cell therapy products have changed frequently and will likely continue
to change in the future. Moreover, there is substantial, and sometimes uncoordinated, overlap in those responsible for
regulation of existing gene therapy products and cell therapy products, which could impact the timing and cost of any
regulatory approval. For example, in the United States, the FDA has established the Office of Tissues and Advanced
Therapies within its Center for Biologics Evaluation and Research, or CBER, to consolidate the review of gene therapy and
related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review. Gene
therapy clinical trials are also subject to review and oversight by an institutional biosafety committee, or IBC, and/or
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an institutional review board, or IRB, which are local institutional committees or boards, as applicable, that review,
approve and oversee basic and clinical research conducted at the institution participating in the clinical trial.
In the EU, the EMA’s Committee for Advanced Therapies, or CAT, is responsible for assessing the quality, safety,
and efficacy of ATMPs. ATMPs include gene therapy medicines, somatic-cell therapy medicines and tissue-engineered
medicines. The role of the CAT is to prepare a draft opinion on an application for marketing authorization for a gene
therapy medicinal candidate that is submitted to the EMA. In the EU, the development and evaluation of a gene therapy
product must be considered in the context of the relevant EU guidelines. The EMA may issue new guidelines concerning
the development and marketing authorization for gene therapy products and require that we comply with these new
guidelines. As a result, the procedures and standards applied to gene therapy products and cell therapy products may be
applied to any gene therapy product candidate we may develop, but that remains uncertain at this point.
Post Brexit, MAAs for ATMPs in Great Britain are regulated nationally and assessed in accordance with the
general provisions in place for the licensing of medicines, taking the specific requirements for this group of medicines into
account. In Northern Ireland, ATMPs continue to be authorized according to the EU’s centralized procedure. Definitions
for individual classes of ATMPs remain unchanged and classification of ATMPs are undertaken by the MHRA in
accordance with EU legislation and current guidance from CAT. Data, traceability, exemptions from licensing, packaging
and post-authorization requirements remain in line with EU requirements transposed into UK law. However, if the EMA
issues new guidance on ATMPs going forward, there is a risk of regulatory divergence with the MHRA and separate
procedures and standards with which we may need to comply.
Adverse developments in preclinical studies or clinical trials conducted by others in the field of gene therapy and
gene regulation products may cause the FDA, MHRA and other regulatory bodies to revise the requirements for approval
of any product candidates we may develop or limit the use of products utilizing gene regulation technologies, either of
which could harm our business. In addition, the clinical trial requirements of the FDA, MHRA and other regulatory
authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary
substantially according to the type, complexity, novelty, and intended use and market of the potential products. The
regulatory approval process for product candidates such as ours can be more expensive and take longer than for other,
better known, or more extensively studied pharmaceutical or other product candidates. Further, as we are developing novel
treatments for diseases in which there is little clinical experience with new endpoints and methodologies, there is
heightened risk that the FDA, MHRA, EMA or other regulatory bodies may not consider the clinical trial endpoints to
provide clinically meaningful results, and the resulting clinical data and results may be more difficult to analyze. The
prospectively designed natural history studies with the same endpoints as our corresponding clinical trials may not be
accepted by the FDA, MHRA, EMA or other regulatory authorities. Regulatory agencies administering existing or future
regulations or legislation may not allow production and marketing of products utilizing gene regulation technology in a
timely manner or under technically or commercially feasible conditions. In addition, regulatory action or private litigation
could result in expenses, delays, or other impediments to our research programs or the commercialization of resulting
products.
The regulatory review committees and advisory groups described above and the new guidelines they promulgate
may lengthen the regulatory review process, require us to perform additional preclinical studies or clinical trials, increase
our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and
commercialization of these treatment candidates, or lead to significant post-approval limitations or restrictions. As we
advance our research programs and develop future product candidates, we will be required to consult with these regulatory
and advisory groups and to comply with applicable guidelines. If we fail to do so, we may be required to delay or
discontinue development of any product candidates we identify and develop.
Clinical trials are expensive, time-consuming, difficult to design and implement, and involve an uncertain outcome.
Further, we may encounter substantial delays in our clinical trials.
The clinical trials and manufacturing of our product candidates are, and the manufacturing and marketing of our
products, if approved, will be, subject to extensive and rigorous review and regulation by numerous government authorities
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in the United States and in other countries where we intend to test and market our product candidates. Before obtaining
regulatory approvals for the commercial sale of any of our product candidates, we must demonstrate through lengthy,
complex and expensive preclinical testing and clinical trials that our product candidates are both safe and effective for use
in each target indication. In particular, because our product candidates are subject to regulation as biological drug products,
we will need to demonstrate that they are safe, pure, and potent for use in their target indications. Each product candidate
must demonstrate an adequate risk versus benefit profile in its intended patient population and for its intended use.
Clinical testing is expensive, can take many years to complete and is subject to uncertainty. We cannot guarantee
that any clinical trials will be conducted as planned or completed on schedule, if at all. Failure can occur at any time during
the clinical trial process. Even if our future clinical trials are completed as planned, we cannot be certain that their results
will support the safety and effectiveness of our product candidates for their targeted indications. Our future clinical trial
results may not be successful.
In addition, even if such trials are successfully completed, we cannot guarantee that the FDA, MHRA, EMA or
other regulatory authorities will interpret the results as we do, and more trials could be required before we submit our
product candidates for approval. To the extent that the results of the trials are not satisfactory to the FDA, MHRA, EMA or
other regulatory authorities for support of an MAA, we may be required to expend significant resources, which may not be
available to us, to conduct additional trials in support of potential approval of our product candidates.
To date, we have not completed any clinical development programs required for the approval of any of our product
candidates. Although we are currently conducting several clinical development programs, we may experience delays in
conducting any clinical trials and we do not know whether our ongoing and future clinical trials will begin on time, need to
be redesigned, be able to recruit and enroll patients on time or be completed on schedule, or at all. Events that may prevent
successful or timely completion of clinical development include:
● inability to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the
initiation of clinical trials;
● delays in sufficiently developing, characterizing or controlling a manufacturing process suitable for
advanced clinical trials;
● delays in developing suitable assays for screening patients for eligibility for trials with respect to certain
product candidates;
● delays in reaching agreement with the FDA, MHRA or other regulatory authorities as to the design or
implementation of our clinical trials and obtaining regulatory approval to commence a clinical trial;
● inability to reach an agreement on acceptable terms with clinical trial sites or prospective contract
research organizations, or CROs, the terms of which can be subject to extensive negotiation and may
vary significantly among different clinical trial sites;
● our inability to recruit and train clinical trial investigators with the appropriate competencies and
experience to conduct the clinical trials, administer our product candidates and oversee clinical trial
staff;
● delays in obtaining IRB or ethics committee approval or positive opinion at each site;
● inability to recruit suitable patients to participate in a clinical trial;
● inability to develop and validate the companion diagnostic to be used in a clinical trial, if applicable;
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● delays in sufficiently developing, designing and manufacturing equipment or medical devices used in
our clinical trials;
● patients not completing a clinical trial or returning for post-treatment follow-up;
● clinical sites, CROs, or other third parties deviating from trial protocol or dropping out of a trial;
● failure to perform in accordance with the FDA’s good clinical practice, or GCP, requirements, or
applicable regulatory guidelines in other countries;
● addressing patient safety concerns that arise during the course of a trial, including occurrence of adverse
events associated with the product candidate that are viewed to outweigh its potential benefits;
● having an insufficient number of clinical trial sites; or
● inability to manufacture sufficient quantities of our product candidates for use in clinical trials.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent
our ability to receive marketing approval or commercialize our product candidates or significantly increase the cost of such
trials, including:
● we may experience changes in regulatory requirements or guidance, or receive feedback from regulatory
authorities that requires us to modify the design of our clinical trials;
● clinical trials of our product candidates may produce negative or inconclusive results, and we may
decide, or regulators may require us, to conduct additional clinical trials or abandon development
programs;
● the number of patients required for clinical trials of our product candidates may be larger than we
anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop
out of these clinical trials at a higher rate than we anticipate;
● our third-party contractors may fail to comply with regulatory requirements or meet their contractual
obligations to us in a timely manner, or at all;
● we or our investigators might have to suspend or terminate clinical trials of our product candidates for
various reasons, including non-compliance with regulatory requirements, a finding that our product
candidates have undesirable side effects or other unexpected characteristics, or a finding that the
participants are being exposed to unacceptable health risks;
● the cost of clinical trials of our product candidates may be greater than we anticipate, and we may not
have funds to cover the costs;
● the supply or quality of our product candidates or other materials necessary to conduct clinical trials of
our product candidates may be insufficient or inadequate;
● business interruptions resulting from geopolitical actions, including war and terrorism, or a widespread
health emergency, such as the COVID-19 pandemic, or natural disasters including earthquakes,
typhoons, floods and fires, or from economic or political instability; and
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● any future collaborators that conduct clinical trials may face any of the above issues, and they may
conduct clinical trials in ways they view as advantageous to them but that are suboptimal for us.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that
we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other
testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we
may:
● incur unplanned costs;
● be delayed in obtaining marketing approval for our product candidates or not obtain marketing approval
at all;
● obtain marketing approval in some countries and not in others;
● obtain marketing approval for indications or patient populations that are not as broad as intended or
desired;
● obtain marketing approval with labeling that includes significant use or distribution restrictions or safety
warnings, including boxed warnings;
● be subject to additional post-marketing testing requirements; or
● have the product removed from the market after obtaining marketing approval.
We could encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in
which such trials are being conducted, by the Data Safety Monitoring Board, or DSMB, for such trial or by the FDA,
MHRA or other foreign regulatory authorities. Such authorities may impose such a suspension or termination due to a
number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical
protocols, inspection of the clinical trial operations or trial site by the FDA, MHRA or other regulatory authorities resulting
in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from
using a drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the
clinical trial.
Our Most Advanced Product Candidates will require extensive clinical testing before we are prepared to submit a
BLA or MAA for regulatory approval. We cannot predict with any certainty if or when we might complete the clinical
development for our product candidates and submit a BLA or MAA for regulatory approval of any of our product
candidates or whether any such BLA or MAA will be approved. We may also seek feedback from the FDA, MHRA, EMA
or other regulatory authorities on our clinical development program, and the FDA, MHRA, EMA or such regulatory
authorities may not provide such feedback on a timely basis, or such feedback may not be favorable, which could further
delay our development programs.
If we experience delays in the commencement or completion of our clinical trials, or if we terminate a clinical trial
prior to completion, the commercial prospects of our product candidates could be harmed, and our ability to generate
revenues from our product candidates may be delayed. In addition, any delays in our clinical trials could increase our costs,
slow down the development and approval process and jeopardize our ability to commence product sales and generate
revenues. Any of these occurrences may harm our business, financial condition and results of operations. In addition, many
of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead
to the denial of regulatory approval of our product candidates.
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In addition, the FDA’s and other regulatory authorities’ policies with respect to clinical trials may change and
additional government regulations may be enacted. For instance, the regulatory landscape related to clinical trials in the EU
recently evolved. The CTR adopted in April 2014 became applicable on January 31, 2022 and repeals the EU Clinical
Trials Directive. While the EU Clinical Trials Directive required a separate CTA to be submitted in each member state in
which the clinical trial takes place, to both the competent national health authority and an independent ethics committee,
the CTR introduces a centralized process and only requires the submission of a single application for multi-center trials.
The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each
member state, leading to a single decision per member state. The assessment procedure of the CTA has been harmonized as
well, including a joint assessment by all member states concerned, and a separate assessment by each member state with
respect to specific requirements related to its own territory, including ethics rules. Each member state’s decision is
communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may
proceed. The CTR foresees a three-year transition period. The extent to which ongoing and new clinical trials will be
governed by the CTR varies. Clinical trials for which an application was submitted (i) prior to January 31, 2022 under the
EU Clinical Trials Directive, or (ii) between January 31, 2022 and January 31, 2023 and for which the sponsor has opted
for the application of the EU Clinical Trials Directive remain governed by said EU Clinical Trials Directive until January
31, 2025. After this date, all clinical trials (including those which are ongoing) will become subject to the provisions of the
CTR. Compliance with the CTR requirements by us and our third-party service providers, such as CROs, may impact our
development plans.
It is currently unclear to what extent the UK will seek to align its regulations with the EU. The UK regulatory
framework in relation to clinical trials is derived from existing EU legislation (as implemented into UK law, through
secondary legislation). On January 17, 2022, the MHRA launched an eight-week consultation on reframing the UK
legislation for clinical trials. The consultation closed on March 14, 2022 and aims to streamline clinical trials approvals,
enable innovation, enhance clinical trials transparency, enable greater risk proportionality, and promote patient and public
involvement in clinical trials. The outcome of the consultation is being closely watched and will determine whether the UK
chooses to align with the CTR or diverge from it to maintain regulatory flexibility. Under the terms of the Protocol on
Ireland and Northern Ireland, provisions of the CTR which relate to the manufacture and import of investigational
medicinal products and auxiliary medicinal products currently apply in Northern Ireland. On February 27, 2023, the UK
Government and the European Commission reached a political agreement on the “Windsor Agreement” which may revise
the Protocol on Ireland and Northern Ireland in order to address some of the perceived shortcomings in its operation. If
implemented, this may have further impact on the application of the CTR in Northern Ireland. A decision by the UK not to
closely align its regulations with the new approach that will be adopted in the EU may have an effect on the cost of
conducting clinical trials in the UK as opposed to other countries.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or
policies governing clinical trials, our development plans may also be impacted.
The affected populations for our product candidates may be smaller than we or third parties currently project, which
may affect the addressable markets for our product candidates.
Our projections of the number of people who have the diseases we are seeking to treat, as well as the subset of
people with these diseases who have the potential to benefit from treatment with our product candidates, are estimates
based on our knowledge and understanding of these diseases. The total addressable market opportunity for our product
candidates will ultimately depend upon a number of factors including the diagnosis and treatment criteria included in the
final label, if approved for sale in specified indications, acceptance by the medical community, patient access and product
pricing and reimbursement. Incidence and prevalence estimates are frequently based on information and assumptions that
are not exact and may not be appropriate, and the methodology is forward-looking and speculative. The process we have
used in developing an estimated incidence and prevalence range for the indications we are targeting has involved collating
limited data from multiple sources. Accordingly, the incidence and prevalence estimates included, or supporting the
information, in our SEC filings and other materials should be viewed with caution. Further, the data and statistical
information included, or supporting the information, in our SEC filings and other materials, including estimates derived
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from them, may differ from information and estimates made by our competitors or from current or future studies conducted
by independent sources.
The use of such data involves risks and uncertainties and is subject to change based on various factors. Our
estimates may prove to be incorrect and new studies may change the estimated incidence or prevalence of the diseases we
seek to address. The number of patients with the diseases we are targeting in the United States, the UK, the EU and
elsewhere may turn out to be lower than expected or may not be otherwise amenable to treatment with our products, or new
patients may become increasingly difficult to identify or access, all of which would harm our results of operations and our
business.
Negative public opinion of gene therapy and increased regulatory scrutiny of gene therapy and genetic research may
adversely impact public perception of our current and future product candidates.
Our potential therapeutic products involve introducing genetic material into patients’ cells. The clinical and
commercial success of our potential products will depend in part on public acceptance of the use of gene therapy and gene
regulation for the prevention or treatment of human diseases. Public attitudes may be influenced by claims that gene
therapy and gene regulation are unsafe, unethical, or immoral, and, consequently, our products may not gain the acceptance
of the public or the medical community. Public attitudes may adversely impact our ability to enroll clinical trials.
Moreover, our success will depend upon physicians prescribing, and their patients being willing to receive, treatments that
involve the use of product candidates we may develop in lieu of, or in addition to, existing treatments with which they are
already familiar and for which greater clinical data may be available.
More restrictive government regulations or negative public opinion would have a negative effect on our business or
financial condition and may delay or impair the development and commercialization of our product candidates or demand
for any products once approved. For example, in 2003, trials using early versions of murine gamma-retroviral vectors,
which integrate with, and thereby alter, the host cell’s DNA, have led to several well-publicized adverse events, including
reported cases of leukemia. Although none of our current product candidates utilize murine gamma-retroviral vectors, our
product candidates use a viral delivery system. Adverse events in our clinical trials, even if not ultimately attributable to
our product candidates, and the resulting publicity could result in increased governmental regulation, unfavorable public
perception, potential regulatory delays in the testing or approval of our product candidates or the halting of clinical trials,
stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product
candidates. The risk of cancer remains a concern for gene therapy and we cannot assure that it will not occur in any of our
planned or future clinical trials. In addition, there is the potential risk of delayed adverse events following exposure to gene
therapy products due to persistent biological activity of the genetic material or other components of products used to carry
the genetic material. If any such adverse events occur, commercialization of our product candidates or further advancement
of our clinical trials could be halted or delayed, which would have a negative impact on our business and operations.
We may fail to maintain the benefits of certain regulatory designations that we have obtained for our product
candidates, and may in the future seek and fail to obtain such designations for other of our current or potential future
product candidates. Even if such designations are obtained, they may not lead to faster development or regulatory
review or approval, and they do not increase the likelihood that our product candidates will receive marketing approval.
A sponsor may seek approval of its product candidate under programs designed to accelerate the FDA’s review and
approval of new drugs and biological products that meet certain criteria. For example, the FDA has a Fast Track
designation program that is intended to expedite or facilitate the process for reviewing new products that meet certain
criteria. Specifically, new drugs and biological products are eligible for Fast Track designation if they are intended to treat
a serious or life-threatening disease or condition and demonstrate the potential to address unmet medical needs. Fast Track
designation applies to the combination of the product and the specific indication for which it is being studied. For product
candidates with Fast Track designation, sponsors may be eligible for more frequent meetings with the FDA to discuss the
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candidate’s development plan and more frequent written communication from the FDA about such things as the design of
the proposed clinical trials and use of biomarkers. In addition, the FDA may consider for review sections of the BlA on a
rolling basis before the complete application is submitted if relevant criteria are satisfied, including an agreement with
FDA on the proposed schedule for the submission of portions of the BLA, and the payment of applicable user fees before
FDA may initiate a review. Even if Fast Track designation is granted, it may be rescinded if the product no longer meets
the qualifying criteria. In April 2018, botaretigene sparoparvovec was issued Fast Track designation by the FDA for the
treatment of X-linked retinitis pigmentosa owing to defects in RPGR. In August 2018, AAV-CNGB3 was issued Fast Track
designation by the FDA for the treatment of achromatopsia caused by CNGB3 mutations. In January 2021, AAV-CNGA3
was issued Fast Track designation by the FDA for the treatment of achromatopsia caused by CNGA3 mutations.
Similarly, the EMA has established the PRIME scheme to expedite the development and review of product
candidates that show a potential to address to a significant extent an unmet medical need, based on early clinical data. In
February 2018, AAV-CNGB3 in the treatment of achromatopsia associated with defects in CNGB3 was admitted to the
PRIME scheme of the EMA. In February 2020, botaretigene sparoparvovec for the treatment of X-linked retinitis
pigmentosa owing to defects in RPGR was admitted to the PRIME scheme of the EMA.
A sponsor may also seek an RMAT designation for its product candidates. In 2017, the FDA established the RMAT
designation as part of its implementation of the 21st Century Cures Act. A biological product is eligible for RMAT
designation if it qualifies as an RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human
cell and tissue product, or any combination product using such therapies or products, with limited exceptions, and is
intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition and for which preliminary
clinical evidence indicates that the biological product has the potential to address unmet medical needs for such a disease
or condition. In a February 2019 guidance, the FDA also stated that certain gene therapies that lead to a sustained effect on
cells or tissues may meet the definition of a regenerative medicine therapy. RMAT designation provides potential benefits
that include more frequent meetings with the FDA to discuss the development plan for the product candidate, and
eligibility for rolling review and priority review. Products granted RMAT designation may also be eligible for accelerated
approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or
reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites. RMAT-
designated products that receive accelerated approval may, as appropriate, fulfill their post-approval requirements through
the submission of clinical evidence, clinical trials, patient registries, or other sources of real world evidence (such as
electronic health records); through the collection of larger confirmatory data sets; or via post-approval monitoring of all
patients treated with such therapy prior to approval of the therapy.
Such regulatory designations are within the discretion of the FDA, MHRA, EMA and other regulatory authorities.
Accordingly, even if we believe one of our product candidates meets the criteria for such regulatory programs designed to
accelerate the review and approval of new drugs and we seek such designations, the FDA, MHRA, EMA or other
applicable regulatory authority may disagree and instead determine not to make such designation for such product
candidate. We cannot be sure that our evaluation of our product candidates as qualifying for such regulatory designations
will meet the regulatory authority’s expectations. In any event, the receipt of such regulatory designations for a product
candidate may not result in a faster development process, review, or approval compared to product candidates considered
for approval under conventional regulatory procedures and does not assure ultimate approval by the regulatory authorities.
In addition, even if additional product candidates are granted such regulatory designations, the regulatory authority may
later decide that such product candidates no longer meet the conditions for qualification or decide that the time period for
review or approval will not be shortened.
We have received orphan drug designation from the FDA and European Commission for AAV-CNGB3, AAV-CNGA3,
AAV-RPE65, botaretigene sparoparvovec, AAV-AIPL1, AAV-RDH12 and from the FDA for AAV-hAQP1, and we may
seek orphan drug designation for additional product candidates in the future, but any orphan drug designations we
have received or may receive in the future may not confer marketing exclusivity or other expected benefits.
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Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is intended to treat a rare
disease or condition, defined as one occurring in a patient population of fewer than 200,000 in the United States, or a
patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of
developing the drug will be recovered from sales in the United States. In the EU, the European Commission grants orphan
designation on the basis of the EMA’s Committee for Orphan Medicinal Products opinion. A medicinal product may be
designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically
debilitating condition; (2) either (a) such condition affects no more than five in 10,000 persons in the EU when the
application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient
return in the EU to justify investment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment, of
such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to
those affected by the condition.
In the United States, orphan drug designation entitles a party to financial incentives such as opportunities for grant
funding towards clinical trial costs, tax credits for qualified clinical testing, and user-fee waivers. In addition, if a product
receives the first FDA approval of that drug for the indication for which it has orphan designation, the product is entitled to
orphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the
same disease or condition for a period of seven years, except in limited circumstances, such as a showing of clinical
superiority over the product with orphan exclusivity or where the manufacturer is unable to assure the availability of
sufficient quantities of the orphan drug to meet the needs of patients with the rare disease or condition. Under the FDA’s
regulations, the FDA will deny orphan drug exclusivity to a designated drug upon approval if the FDA has already
approved another drug with the same principal molecular structural features, in the case of a biologic, for the same
indication, unless the drug is demonstrated to be clinically superior to the previously approved drug. In the EU, orphan
designation entitles a party to financial incentives such as reduction of fees or fee waivers, protocol assistance, and access
to the centralized MA procedure. Moreover, upon grant of an MA and assuming the requirement for orphan designation are
also met at the time the MA is granted, orphan medicinal products are entitled to a ten-year period of market exclusivity for
the approved therapeutic indication. The period of market exclusivity is extended by two years for orphan medicinal
products that have also complied with an agreed PIP. This period may be reduced to six years if, at the end of the fifth year,
the orphan designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not
to justify maintenance of market exclusivity, or where the prevalence of the condition has increased above the orphan
designation threshold. In the EU, an MA for an orphan designated product will not be granted if a similar product has been
approved in the EU for the same therapeutic indication, unless the applicant can establish that (i) its product, although
similar to the orphan medicinal product already authorized is safer, more effective or otherwise clinically superior; (ii) the
MA holder for the orphan medicinal product grants its consent; or (iii) if the MA holder of the orphan medicinal product is
unable to supply sufficient quantities of product. A similar medicine is a product containing a similar active substance or
substances as those contained in an already authorized product. Similar active substance is defined as an identical active
substance, or an active substance with the same principal molecular structural features (but not necessarily all of the same
molecular features) and which acts via the same mechanism.
Post-Brexit, the UK has retained the EU Regulation which governs the designation of medicinal products as orphan
medicinal products and which establishes incentives thereto (Regulation (EC) No. 141/2000) as part of UK law by virtue of
the EU (Withdrawal) Act 2018. However under the Retained EU Law (Revocation and Reform) Bill, which is currently
before the UK Parliament, unless this legislation is expressly preserved and “assimilated” into domestic law or extended by
ministerial regulations (to no later than June 23, 2026) it will automatically expire and be revoked by December 31, 2023.
There is therefore uncertainty about the future regulations relating to orphan designation in Great Britain, and any future
changes to the legal requirements could lead to greater regulatory complexity and increased costs to our business.
The MHRA is responsible for reviewing applications from companies for orphan designation at the time of an
MAA. If a medicinal product has been designated orphan in the EU under Regulation (EC) 141/2000, a Great Britain
orphan MAA can be made under regulation 50G of the Human Medicines Regulation 2012 (as amended). A UK-wide
orphan MAA can only be considered in the absence of an active EU orphan designation. If a UK-wide orphan MA is
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granted and the medicinal product subsequently receives EU orphan designation, the MA holder would need to submit a
variation to change this to a Great Britain orphan MA.
We have obtained orphan drug designation from the FDA and European Commission for AAV-CNGB3 for the
treatment of achromatopsia caused by mutations in the CNGB3 gene, for AAV-CNGA3 for the treatment of achromatopsia
due to autosomal-recessive CNGA3 gene mutations, for AAV-RPE65 for the treatment of Leber congenital amaurosis, for
botaretigene sparoparvovec for the treatment of X-linked retinitis pigmentosa, for AAV-AIPL1 for the treatment of
inherited retinal dystrophy due to defects in AIPL1 gene and for AAV-RDH12 for the treatment of retinol dehydrogenase
12 (RDH12) mutation-associated retinal dystrophy, and we obtained orphan drug designation from the FDA for AAV-
hAQP1 for the treatment of grade 2 and grade 3 late xerostomia from parotid gland hypofunction caused by radiotherapy.
We may seek orphan drug designation for other current and future product candidates. Even with orphan drug designation,
we may not be the first to obtain marketing approval for any particular orphan indication due to the uncertainties associated
with developing pharmaceutical products, which could prevent us from marketing our product candidates if another
company is able to obtain orphan drug exclusivity before we do. In addition, exclusive marketing rights in the United
States and the EU may be unavailable if we seek approval for an indication broader than the orphan-designated indication
or may be lost in the United States or EU if the FDA or foreign authorities later determine that the request for designation
was materially defective or if we are unable to assure sufficient quantities of the drug to meet the needs of patients with the
rare disease or condition following approval. Further, even if we obtain orphan drug exclusivity, that exclusivity may not
effectively protect our product candidates from competition because different biologics with different active principal
molecular structural features can be approved for the same condition. In addition, the FDA can subsequently approve
products with the same principal molecular structural features, in the case of a biologic, for the same condition if the FDA
concludes that the later product is safer, more effective, or makes a major contribution to patient care. Likewise, in the EU
and Great Britain, the European Commission or MHRA, respectively, can authorize a similar product for the same
therapeutic indication, if it concludes that the later product is safer, more effective or clinically superior; if the MA holder
for the initial orphan medicinal product grants its consent; or if such MA holder is unable to supply sufficient quantities of
the product. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives
the drug any advantage in the regulatory review or approval process. In addition, while we intend to seek orphan drug
designation for other existing and future product candidates, we may never receive such designations. There have been
legal challenges to aspects of the FDA’s regulations and policies concerning the exclusivity provisions of the Orphan Drug
Act, and future challenges could lead to changes that affect the protections afforded our product candidates in ways that are
difficult to predict. It is uncertain how ongoing and future challenges might affect our business.
We and our contract manufacturers for plasmid are subject to significant regulation with respect to manufacturing our
products. Our manufacturing facilities and the third-party manufacturing facilities which we rely on may not continue
to meet regulatory requirements and have limited capacity.
We currently have relationships with a limited number of suppliers for the manufacturing of plasmid, a component
of our viral vectors and product candidates. We completed the fit-out of our first cGMP manufacturing facility in early
2018 and we completed the acquisition of the buildings for our second, large scale cGMP viral vector manufacturing
facility and our first cGMP plasmid and DNA production facility in Shannon, Ireland in January 2021 to expand our
manufacturing and supply chain capabilities. However, if we experience slowdowns or problems with our completed
facility or the development and completion of our new facilities and are unable to establish or scale our internal
manufacturing capabilities, we will need to continue to contract with manufacturers that can produce the preclinical,
clinical and commercial supply of our products. Each supplier may require licenses to manufacture such components if
such processes are not owned by the supplier or in the public domain and we may be unable to transfer or sublicense the
intellectual property rights we may have with respect to such activities.
All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including our existing
contract manufacturers for components of our product candidates, are subject to extensive regulation. Components of a
finished therapeutic product approved for commercial sale or used in late-stage clinical trials must be manufactured in
accordance with cGMP. These regulations govern manufacturing processes and procedures (including record keeping) and
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the implementation and operation of quality systems to control and assure the quality of investigational products and
products approved for sale. Poor control of production processes can lead to the introduction of adventitious agents or other
contaminants, or to inadvertent changes in the properties or stability of our product candidates that may not be detectable in
final product testing. We or our contract manufacturers must supply all necessary documentation in support of a BLA or
MAA on a timely basis. Our facilities and quality systems and the facilities and quality systems of some or all of our third-
party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of
regulatory approval of our product candidates or any of our other potential products. In addition, the regulatory authorities
may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or our
other potential products or the associated quality systems for compliance with the regulations applicable to the activities
being conducted. If these facilities do not pass a pre-approval plant inspection, FDA, MHRA or other regulatory approval
of the products will not be granted.
If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our
product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant
regulatory authority may require remedial measures that may be costly and/or time-consuming for us or a third party to
implement and that may include the temporary or permanent suspension of a clinical trial or commercial sales or the
temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we
contract could harm our business. If we or any of our third-party manufacturers fail to maintain regulatory compliance, the
FDA, MHRA or other regulatory authorities can impose regulatory sanctions including, among other things, refusal to
approve a pending application for a new drug product or biologic product, or revocation of a pre-existing approval. As a
result, our business, financial condition and results of operations may be harmed. Additionally, if supply from one
approved manufacturer is interrupted, there could be a significant disruption in commercial supply. An alternative
manufacturer would need to be qualified through a BLA and/or MAA supplement which could result in further delay. The
regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production.
Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and
commercial timelines.
These factors could cause the delay of clinical trials, regulatory submissions, required approvals or
commercialization of our product candidates, cause us to incur higher costs and prevent us from commercializing our
products successfully. Furthermore, if our suppliers fail to meet contractual requirements, and we are unable to secure one
or more replacement suppliers capable of production at a substantially equivalent cost, our clinical trials may be delayed, or
we could lose potential revenue.
Any contamination in our manufacturing process, shortages of raw materials or failure of our plasmid supplier to
deliver necessary components, or other issues with the manufacturing process, could result in delays in our clinical
development or marketing schedules.
Given the nature of biologics manufacturing, there is a risk of contamination. Any contamination could adversely
affect our ability to produce product candidates on schedule and could, therefore, harm our results of operations and cause
reputational damage. Some of the raw materials required in our manufacturing process are derived from biologic sources.
Such raw materials are difficult to procure and may be subject to contamination or recall. In addition, our manufacturing
process is complex, and the manufacturing batch cycle period can be several weeks long. Each batch cycle may not yield
planned quantities or meet the required standards. A material shortage, contamination, recall or restriction on the use of
biologically derived substances in the manufacture of our product candidates, failure of manufacturing equipment or
systems or other issues with our manufacturing process, could adversely impact or disrupt the commercial manufacturing
or the production of clinical material, which could adversely affect our development timelines and our business, financial
condition, results of operations and prospects.
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Expanding our manufacturing capacity has and will continue to be costly and we may be unsuccessful in doing so in a
timely manner, which could delay our current and future clinical development programs, or delay the
commercialization of our product candidates.
In addition to our existing manufacturing facility in London, United Kingdom, we may lease, operate, purchase, or
construct additional facilities to conduct expanded manufacturing or other related activities in the future. In January 2021,
we completed the acquisition of our second, large scale cGMP viral vector manufacturing facility and our first cGMP
plasmid and DNA production facility in Shannon, Ireland. Expanding our manufacturing capacity to produce the
preclinical, clinical and commercial supply of our products and their components will require completing our new facilities
in Ireland, substantial additional expenditures, time, and various regulatory approvals and permits, all of which may be
impacted by the COVID-19 pandemic. Further, we will need to hire and train significant numbers of employees and
managerial personnel to staff our expanding manufacturing and supply chain operations, including in our new facilities in
Ireland. Start-up costs can be large and may exceed our expectations, and scale-up entails significant risks related to
process development and manufacturing yields. In addition, we may face difficulties or delays in developing or acquiring
the necessary production equipment and technology to manufacture sufficient quantities of our product candidates for use
in clinical trials and, should they be approved, to supply the commercial market at reasonable costs and in compliance with
applicable regulatory requirements. We may not successfully expand or establish sufficient manufacturing capabilities or
manufacture our products economically or in compliance with cGMP and other regulatory requirements, and we and our
collaborators may not be able to build or procure additional capacity in the required timeframe to meet the requirements of
our clinical programs or to meet potential commercial demand for our product candidates. This could also delay or require
us to discontinue one or more of our clinical development programs or could interfere with our efforts to successfully
commercialize our products. As a result, our business, prospects, operating results, and financial condition could be
materially harmed.
If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed
or otherwise adversely affected.
The timely completion of clinical trials in accordance with their protocols depends, among other things, on our
ability to enroll a sufficient number of patients who remain in the study until its conclusion. The natural history studies may
fail to provide us with patients for our clinical trials because patients enrolled in the natural history studies may not be good
candidates for our clinical trials or may choose to not enroll in our clinical trials. We may encounter delays in enrolling, or
be unable to enroll, a sufficient number of patients to complete any of our clinical trials, and even once enrolled we may be
unable to retain a sufficient number of patients to complete any of our trials. This may result in increased costs, program
delays or both, which could have a harmful effect on our ability to develop our product candidates, or could render further
development impossible. The enrollment of patients depends on many factors, including:
● the size and nature of the patient population;
● the patient eligibility criteria defined in the protocol;
● the size of the patient population required for analysis of the trial’s primary endpoints;
● the proximity of patients to study sites;
● the design of the trial or side effects that may arise in development;
● our ability to recruit clinical trial investigators with the appropriate competencies and experience;
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● clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied
in relation to other available therapies, including any new products that may be approved for the
indications we are investigating;
● our ability to obtain and maintain patient consents;
● the risk that patients enrolled in clinical trials will drop out of the trials before completion; and
● business interruptions resulting from geopolitical actions, including war and terrorism, or widespread
health emergencies, such as the COVID-19 pandemic, or natural disasters including earthquakes,
typhoons, floods and fires, or from economic or political instability.
In addition, other clinical trials for product candidates that are in the same therapeutic areas as our product
candidates or approved products for the same clinical indications (such as Luxturna marketed by Spark Therapeutics, Inc.
for the treatment of RPE65-associated retinal disease) may reduce the number and type of patients available to us.
Our product candidates may cause serious adverse events or undesirable side effects or have other properties which may
delay or prevent their regulatory approval, limit the commercial profile of an approved label, or, result in significant
negative consequences following marketing approval, if any.
Serious adverse events or undesirable side effects caused by our product candidates could cause us or regulatory
authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of
regulatory approval by the FDA, MHRA or other authorities. Results of our clinical trials could reveal a high and
unacceptable severity and prevalence of side effects, toxicities or unexpected characteristics, including death. A risk in any
gene therapy product based on viral vectors is the risk of insertional mutagenesis.
If unacceptable side effects or deaths arise in the development of our product candidates, we, the FDA, the IRBs at
the institutions in which our studies are conducted, DSMB, or other regulatory bodies could suspend or terminate our
clinical trials or the FDA, MHRA or other regulatory authorities could order us to cease clinical trials or deny approval of
our product candidates for any or all targeted indications. Undesirable side effects or deaths in clinical trials with our
product candidates may cause the FDA or comparable foreign regulatory authorities to place a clinical hold on the
associated clinical trials, to require additional studies, or otherwise to delay or deny approval of our product candidates for
any or all targeted indications. Treatment-related side effects could also affect patient recruitment or the ability of enrolled
patients to complete the trial or result in potential product liability claims. In addition, these side effects may not be
appropriately recognized or managed by the treating medical staff. We expect to have to train medical personnel using our
product candidates to understand the side effect profiles for our clinical trials and upon any commercialization of any of
our product candidates. Inadequate training in recognizing or managing the potential side effects of our product candidates
could result in patient injury or death. Any of these occurrences may harm our business, financial condition and prospects
significantly.
If any of our product candidates receives marketing approval, and we or others later identify undesirable side
effects caused by any such product, including during any long-term follow-up observation period recommended or required
for patients who receive treatment using our products, a number of potentially significant negative consequences could
result, including:
● regulatory authorities may withdraw approvals of such product;
● we may be required to recall a product or change the way such product is administered to patients;
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● additional restrictions may be imposed on the marketing of the particular product or the manufacturing
processes for the product;
● regulatory authorities may require additional warnings on the label, such as a “black box” warning or
contraindication;
● we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a
medication guide outlining the risks of such side effects for distribution to patients or similar risk
management measures;
● the product could become less competitive;
● we could be sued and held liable for harm caused to patients; and
● our reputation may suffer.
Any of these events could prevent us from achieving or maintaining market acceptance of the particular product
candidate, if approved, and could significantly harm our business, results of operations and prospects.
Success in preclinical studies or clinical trials may not be indicative of results in future clinical trials.
Results from previous preclinical studies or clinical trials are not necessarily predictive of future clinical trial
results, and interim results of a clinical trial are not necessarily indicative of final results. Our product candidates may fail
to show the desired safety and efficacy in clinical development despite positive results in preclinical studies or having
successfully advanced through initial clinical trials.
Success in preclinical testing and early clinical trials does not ensure that later clinical trials will generate the
same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate.
Frequently, product candidates that have shown promising results in early clinical trials have subsequently
suffered significant setbacks in later clinical trials. In addition, the design of a clinical trial can determine whether its
results will support approval of a product and flaws in the design of a clinical trial may not become apparent until the
clinical trial is well advanced. We have limited experience designing clinical trials and may be unable to design and
execute a clinical trial to support regulatory approval. There is a high failure rate for drugs and biologic products
proceeding through clinical trials. Data obtained from preclinical and clinical activities are subject to varying
interpretations, which may delay, limit or prevent regulatory approval, which could negatively impact our business,
financial condition, results of operations and prospects.
The regulatory approval processes of the FDA, MHRA, competent authorities in the EU and other regulatory
authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain
regulatory approval for our product candidates, our business will be substantially harmed.
The time required to obtain approval by the FDA, MHRA, European Commission and other regulatory authorities
is unpredictable but typically takes many years following the commencement of clinical trials and depends upon
numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies,
regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product
candidate’s clinical development and may vary among jurisdictions. For instance, the EU pharmaceutical legislation is
currently undergoing a complete review process, in the context of the Pharmaceutical Strategy for Europe initiative,
launched by the European Commission in November 2020. The European Commission’s proposal for revision of several
legislative instruments related to medicinal products (potentially revising the duration of regulatory exclusivity, eligibility
for expedited pathways, etc.) is currently expected during the first quarter of 2023. The proposed revisions,
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once they are agreed and adopted by the European Parliament and European Council (not expected before the end of 2024
or early 2025) may have a significant impact on the pharmaceutical industry in the long term.
We have not obtained regulatory approval for any product candidate and it is possible that none of our product
candidates in clinical programs or any other product candidates we may seek to develop in the future will ever obtain
regulatory approval. Neither we nor any future collaborator is permitted to market any of our product candidates in the
United States, the UK or the EU until we receive regulatory approval of a BLA from the FDA or of an MAA from the
MHRA or European Commission, respectively. It is possible that the FDA may refuse to accept for substantive review
any BLAs, or the MHRA or EMA any of our MAAs, that we submit for our product candidates or may conclude after
review of our data that our application is insufficient to obtain marketing approval of our product candidates.
Prior to obtaining approval to commercialize a product candidate in the United States, the UK, the EU or
elsewhere, we or our collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to
the satisfaction of the FDA, MHRA, EMA or foreign regulatory agencies, that such product candidates are safe and
effective for their intended uses. Results from nonclinical studies and clinical trials can be interpreted in different ways.
Even if we believe the nonclinical or clinical data for our product candidates are promising, such data may not be
sufficient to support approval by the FDA, MHRA, European Commission or other regulatory authorities. The FDA,
MHRA or EMA may also require us to conduct additional preclinical studies or clinical trials for our product candidates
either prior to or post-approval, or it may object to elements of our clinical development program. Depending on the
extent of these or any other FDA, MHRA or EMA required studies, approval of any regulatory approval applications that
we submit may be delayed by several years, or may require us to expend significantly more resources than we have
available.
Of the large number of potential products in development, only a small percentage successfully complete the
FDA, MHRA, or other foreign regulatory approval processes and are commercialized. The lengthy approval process as
well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market
our product candidates, which would significantly harm our business, results of operations and prospects.
Even if we and / or our collaboration partners, as applicable, obtain FDA, MHRA or European Commission
approval for AAV-GAD, botaretigene sparoparvovec, AAV-CNGB3, AAV-CNGA3, AAV-RPE65, AAV-hAQP1 or our
other product candidates in the United States, UK or EU, we may never obtain approval for or commercialize them in
any other jurisdiction, which would limit our ability to realize their full market potential.
In order to market any products in any particular jurisdiction, we must establish and comply with numerous and
varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA in the
United States, the MHRA in Great Britain or the competent authorities in the EU does not ensure approval by regulatory
authorities in other countries or jurisdictions. However, the failure to obtain approval in one jurisdiction may negatively
impact our ability to obtain approval elsewhere. In addition, clinical trials conducted in one country may not be accepted
by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory
approval in any other country.
Approval processes vary among countries and can involve additional product testing and validation and additional
administrative review periods. Seeking foreign regulatory approval could result in difficulties and increased costs for us
and require additional preclinical studies or clinical trials which could be costly and time consuming. Regulatory
requirements can vary widely from country to country and could delay or prevent the introduction of our products in
those countries. We do not have any product candidates approved for sale in any jurisdiction, including in international
markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply
with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory
approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market
potential of any product we develop will be unrealized.
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Even if we receive regulatory approval of one or more of our product candidates, we will be subject to ongoing
regulatory obligations and continued regulatory review, which may result in significant additional expense, and we may
be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our
product candidates.
Any product candidate for which we obtain marketing approval, along with the manufacturing processes, post-
approval clinical data, labeling, packaging, distribution, adverse event reporting, storage, recordkeeping, export, import,
advertising and promotional activities for such product, among other things, will be subject to extensive and ongoing
requirements of and review by the FDA, MHRA and other regulatory authorities. These requirements include
submissions of safety and other post-marketing information and reports, establishment registration and drug listing
requirements, continued compliance with cGMP and similar requirements relating to manufacturing, quality control,
quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of
samples to physicians and recordkeeping and GCP requirements for any clinical trials that we conduct post-approval.
The FDA, MHRA and other regulatory authorities closely regulate the post-approval marketing and promotion of
genetic therapy medicines to ensure they are marketed only for the approved indications and in accordance with the
provisions of the approved labeling. The FDA, MHRA and other regulatory authorities impose stringent restrictions on
manufacturers’ communications regarding off-label use and if we market our products for uses beyond their approved
indications, we may be subject to enforcement action for off-label marketing. Violations of the U.S. federal Food, Drug,
and Cosmetic Act, or FDCA, relating to the promotion of prescription drugs may lead to FDA enforcement actions and
investigations alleging violations of federal and state health care fraud and abuse laws, as well as state consumer
protection laws. Similar risks apply in foreign jurisdictions.
In addition, later discovery of previously unknown adverse events or other problems with our products,
manufacturers or manufacturing processes, including adverse events of unanticipated severity or frequency, or with our
manufacturing processes or third-party manufacturers, or failure to comply with regulatory requirements, may yield
various results, including:
● restrictions on manufacturing such products;
● restrictions on the labeling or marketing of a product;
● restrictions on product distribution or use;
● requirements to conduct post-marketing studies or clinical trials;
● warning letters or holds on clinical trials;
● withdrawal of the products from the market;
● refusal to approve pending applications or supplements to approved applications that we submit;
● recall of products;
● fines, restitution or disgorgement of profits or revenues;
● suspension or withdrawal of marketing approvals;
● refusal to permit the import or export of our products;
● product seizure or detention; or
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● injunctions or the imposition of civil or criminal penalties.
The FDA’s and foreign regulatory authorities’ policies may change and additional government regulations may be
enacted that could prevent, limit or delay regulatory approval of our product candidates. We also cannot predict the
likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either
in the United States or in other countries. If we are slow or unable to adapt to changes in existing requirements or the
adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any
marketing approval that we may have obtained which would adversely affect our business, prospects and ability to
achieve or sustain profitability.
Interim, “topline” and preliminary data from our clinical trials that we announce or publish from time to time may
change as more patient data become available and are subject to audit and verification procedures that could result
in material changes in the final data.
From time to time, we may publicly disclose preliminary or topline data from our clinical trials, which is based on
a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change
following a more comprehensive review of the data related to the particular study or trial. We also make assumptions,
estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the
opportunity to fully and carefully evaluate all data. As a result, the topline or preliminary results that we report may differ
from future results of the same studies, or different conclusions or considerations may qualify such results, once additional
data have been received and fully evaluated. Topline and preliminary data also remain subject to audit and verification
procedures that may result in the final data being materially different from the topline or preliminary data we previously
published. As a result, topline and preliminary data should be viewed with caution until the final data are available.
From time to time, we may also disclose interim data from our clinical trials. Interim data from these trials that
we may complete are subject to the risk that one or more of the clinical outcomes may materially change as subject
enrollment continues and more data become available. Adverse differences between interim data and topline, preliminary,
or final data could significantly harm our business prospects. Further, disclosure of interim data by us or by our competitors
could result in volatility in the price of our ordinary shares.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates,
calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the
value of the particular program, the approvability or commercialization of the particular product candidate or product and
our company in general. In addition, the information we choose to publicly disclose regarding a particular clinical trial is
based on what is typically extensive information, and you or others may not agree with what we determine is material or
otherwise appropriate information to include in our disclosure. If the interim, topline, or preliminary data that we report
differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability
to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business,
operating results, prospects or financial condition.
We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize
on product candidates or indications that may be more profitable or for which there is a greater likelihood of
success.
Because we have limited financial and managerial resources, we focus on research programs and product
candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other
product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation
decisions may cause us to fail to timely capitalize on viable commercial products or profitable market opportunities. Our
spending on current and future research and development programs and product candidates for specific indications may
not yield any commercially viable products. If we do not accurately evaluate the commercial potential
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or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through
collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to
retain sole development and commercialization rights to such product candidate.
Changes in funding for, or disruptions caused by global health concerns impacting, the FDA and other government
or regulatory agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise
prevent new products and services from being developed, approved or commercialized in a timely manner, which
could negatively impact our business.
The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a
variety of factors, including government budget and funding levels, disruptions caused by global health concerns such as
the COVID-19 pandemic, ability to hire and retain key personnel, including those with experience relating to novel gene
therapy product candidates, acceptance of the payment of user fees, statutory, regulatory, and policy changes and other
events that may otherwise affect the FDA’s or foreign regulatory authorities’ ability to perform routine functions. Average
review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition,
government funding of other government agencies that fund research and development activities is subject to the political
process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other government or regulatory agencies such as the EMA, following its relocation to
Amsterdam and related reorganization (including staff changes), may also slow the time necessary for new product
candidates to be reviewed and/or approved, which would adversely affect our business. For example, over the last several
years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to
furlough critical FDA employees and stop critical activities.
Risks Related to Healthcare Laws and Other Legal Compliance Matters
Enacted and future healthcare legislation may increase the difficulty and cost for us to obtain marketing approval
of and commercialize our product candidates and may affect the prices we may set.
In the United States, the UK, the EU and other jurisdictions, there have been, and we expect there will continue to
be, a number of legislative and regulatory changes and proposed changes to the healthcare system that could affect our
future results of operations. In particular, there have been and continue to be a number of initiatives at the U.S. federal
and state levels that seek to reduce healthcare costs and improve the quality of healthcare. For example, in March 2010,
the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or
collectively the ACA, was enacted, which substantially changed the way healthcare is financed by both governmental and
private insurers. Among the provisions of the ACA, those of greatest importance to the pharmaceutical and biotechnology
industries include the following:
● an annual, non-deductible fee payable by any entity that manufactures or imports certain branded
prescription drugs and biologic agents (other than those designated as orphan drugs), which is
apportioned among these entities according to their market share in certain government healthcare
programs;
● a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program
are calculated for drugs that are inhaled, infused, instilled, implanted or injected;
● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer
Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level,
thereby potentially increasing a manufacturer’s Medicaid rebate liability;
● a licensure framework for follow on biologic products;
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● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct
comparative clinical effectiveness research, along with funding for such research; and
● establishment of a Center for Medicare & Medicaid Innovation at the Centers for Medicare & Medicaid
Services, or CMS, to test innovative payment and service delivery models to lower Medicare and
Medicaid spending, potentially including prescription drug spending.
Since its enactment, there have been judicial, Congressional and executive branch challenges to certain aspects of
the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by
several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision,
President Biden issued an executive order to initiate a special enrollment period for purposes of obtaining health
insurance coverage through the ACA marketplace from February 15, 2021 through August 15, 2021. The executive order
also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to
healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work
requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through
Medicaid or the ACA.
In addition, other legislative changes have been proposed and adopted in the United States since the ACA was
enacted. In August 2011, the Budget Control Act of 2011, among other things, led to aggregate reductions of Medicare
payments to providers of 2% per fiscal year. These reductions went into effect in April 2013 and, due to subsequent
legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension
from May 1, 2020 through March 31, 2022. Under current legislation, the actual reduction in Medicare payment varies
from 1% from April 1, 2022 through June 30, 2022, to up to 3% in the final year of this sequester, unless additional action
is taken by Congress. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among
other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and
cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to
providers from three to five years. These new laws or any other similar laws introduced in the future may result in
additional reductions in Medicare and other health care funding, which could negatively affect our customers and
accordingly, our financial operations.
Moreover, payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives.
For example, CMS may develop new payment and delivery models, such as bundled payment models. In addition,
recently there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their
marketed products, which has resulted in several U.S. Congressional inquiries and proposed and enacted federal
legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs
under Medicare, and review the relationship between pricing and manufacturer patient programs. We expect that
additional U.S. federal healthcare reform measures will be adopted in the future, any of which could limit the amounts
that the U.S. federal government will pay for healthcare products and services, which could result in reduced demand for
our product candidates or additional pricing pressures.
Individual states in the United States have also increasingly passed legislation and implemented regulations
designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints,
discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some
cases, designed to encourage importation from other countries and bulk purchasing. Legally mandated price controls on
payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial
condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using
bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription
drug and other healthcare programs. This could reduce the ultimate demand for our product candidates or put pressure on
our product pricing.
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In addition, FDA regulations and guidance may be revised or reinterpreted by the FDA in ways that may
significantly affect our business and our products. Any new regulations or guidance, or revisions or reinterpretations of
existing regulations or guidance, may impose additional costs or lengthen FDA review times for our product candidates.
We cannot determine how changes in regulations, statutes, policies, or interpretations when and if issued, enacted or
adopted, may affect our business in the future.
Such changes would likely require substantial time and impose significant costs, or could reduce the potential
commercial value of our product candidates, and could materially harm our business and our financial results. In addition,
delays in receipt of or failure to receive regulatory clearances or approvals for any other products would harm our
business, financial condition, and results of operations.
In the UK and EU, similar political, economic and regulatory developments may affect our ability to profitably
commercialize our product candidates, if approved. In addition to continuing pressure on prices and cost containment
measures, legislative developments at the UK or the EU or member state level may result in significant additional
requirements or obstacles that may increase our operating costs. The delivery of healthcare in the UK and the EU,
including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost
exclusively a matter for national law and policy. National governments and health service providers have different
priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In
general, however, the healthcare budgetary constraints in the UK and in most EU member states have resulted in
restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-
increasing national regulatory burdens on those wishing to develop and market products, this could prevent or delay
marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to
commercialize our product candidates, if approved.
In markets outside of the United States, the UK and the EU, reimbursement and healthcare payment systems vary
significantly by country, and many countries have instituted price ceilings on specific products and therapies.
We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation
or administrative action in the United States, the UK the EU or any other jurisdiction. If we or any third parties we may
engage are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or
if we or such third parties are not able to maintain regulatory compliance, our product candidates may lose any regulatory
approval that may have been obtained and we may not achieve or sustain profitability.
Our business operations and current and future relationships with investigators, healthcare professionals,
consultants, third-party payors, patient organizations and customers will be subject to applicable healthcare
regulatory laws, which could expose us to penalties.
Our business operations and current and future arrangements with investigators, healthcare professionals,
consultants, third-party payors, patient organizations and customers, may expose us to broadly applicable fraud and abuse
laws and other healthcare laws and regulations. These laws may constrain the business or financial arrangements and
relationships through which we conduct our operations, including how we research, market, sell and distribute our
product candidates, if approved. Such laws include:
● the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from
knowingly and willfully soliciting, offering, receiving or providing any remuneration (including any
kickback, bribe, or certain rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce
or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or
recommendation of, any good, facility, item or service, for which payment may be made, in whole or in
part, under U.S. federal and state healthcare programs such as Medicare and Medicaid. A person or
entity does not need to have actual knowledge of the statute or specific intent to violate it in order to
have committed a violation;
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● the U.S. federal civil and criminal false claims and civil monetary penalties laws, including the civil
False Claims Act, which, among other things, impose criminal and civil penalties, including through
civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or
causing to be presented, to the U.S. federal government, claims for payment or approval that are false or
fraudulent, knowingly making, using or causing to be made or used, a false record or statement material
to a false or fraudulent claim, or from knowingly making a false statement to avoid, decrease or conceal
an obligation to pay money to the U.S. federal government. In addition, the government may assert that
a claim including items and services resulting from a violation of the U.S. federal Anti-Kickback Statute
constitutes a false or fraudulent claim for purposes of the False Claims Act;
● the U.S. federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created
additional federal criminal statutes which prohibit, among other things, knowingly and willfully
executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly
and willfully falsifying, concealing or covering up a material fact or making any materially false
statement, in connection with the delivery of, or payment for, healthcare benefits, items or services.
Similar to the U.S. federal Anti-Kickback Statute, a person or entity does not need to have actual
knowledge of the statute or specific intent to violate it in order to have committed a violation;
● the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and
medical devices;
● the U.S. Public Health Service Act, which prohibits, among other things, the introduction into interstate
commerce of a biological product unless a biologics license is in effect for that product;
● federal consumer protection and unfair competition laws, which broadly regulate marketplace activities
and activities that potentially harm consumers;
● the U.S. Physician Payments Sunshine Act and its implementing regulations, which requires certain
manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare,
Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to
the government information related to certain payments and other transfers of value to physicians
(defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician
practitioners (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse
anesthetists, anesthesiologist assistants and certified nurse midwives), and teaching hospitals, as well as
ownership and investment interests held by physicians and their immediate family members;
● analogous U.S. state laws and regulations, including: state anti-kickback and false claims laws, which
may apply to our business practices, including but not limited to, research, distribution, sales and
marketing arrangements and claims involving healthcare items or services reimbursed by any third-party
payor, including private insurers; state laws that require pharmaceutical companies to comply with the
pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance
promulgated by the U.S. federal government, or otherwise restrict payments that may be made to
healthcare providers and other potential referral sources; state laws and regulations that require drug
manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts
and other remuneration and items of value provided to healthcare professionals and entities; and state
and local laws that require the registration of pharmaceutical sales representatives; and
● similar healthcare laws and regulations in the UK, EU and other jurisdictions, including reporting
requirements detailing interactions with and payments to healthcare providers.
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Ensuring that our internal operations and future business arrangements with third parties comply with applicable
healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude
that our business practices do not comply with current or future statutes, regulations, agency guidance or case law
involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in
violation of any of the laws described above or any other governmental laws and regulations that may apply to us, we may
be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, exclusion from
government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or
jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, disgorgement,
individual imprisonment, contractual damages, reputational harm, diminished profits and the curtailment or restructuring
of our operations. If any of the physicians or other providers or entities with whom we expect to do business are found to
not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including
exclusions from government funded healthcare programs and imprisonment, which could affect our ability to operate our
business. Further, defending against any such actions can be costly, time-consuming and may require significant personnel
resources. Therefore, even if we are successful in defending against any such actions that may be brought against us, our
business may be impaired.
We are subject to regulation and other legal obligations relating to privacy and data protection. Compliance with these
requirements is complex and costly. Failure to comply could materially harm our business.
The global data protection landscape is rapidly evolving, and we are or may become subject to numerous state,
federal and foreign laws, requirements and regulations governing the collection, use, disclosure, retention and security of
personal information.
In the U.S., HIPAA imposes privacy, security and breach reporting obligations with respect to individually
identifiable health information upon “covered entities” (health plans, health care clearinghouses and certain health care
providers), and their respective business associates, individuals or entities that create, receive, maintain or transmit
protected health information in connection with providing a service for or on behalf of a covered entity, as well as their
covered subcontractors. Most healthcare providers, including research institutions and other vendors from which we may
obtain patient health information, are subject to privacy and security regulations promulgated under HIPAA. We do not
believe that we are currently acting as a covered entity or business associate under HIPAA and thus are not directly
subject to its requirements or penalties. However, depending on the facts and circumstances, we could face substantial
criminal penalties if we knowingly receive individually identifiable health information from a HIPAA-covered healthcare
provider or research institution that has not satisfied HIPAA’s requirements for disclosure of individually identifiable
health information.
In addition, certain state laws govern the privacy and security of health information in certain circumstances, some
of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have
the same effect, thus complicating compliance efforts. Failure to comply with these laws, where applicable, can result in
the imposition of significant civil and/or criminal penalties and private litigation. Further, we may also be subject to other
state laws governing the privacy, processing and protection of personal information. For example, the California
Consumer Privacy Act, or CCPA, confers individual privacy rights for California consumers (as such term is defined in
the law) and places increased privacy and security obligations on entities handling personal information of consumers or
households. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that
has increased the likelihood of, and risks associated with, data breach litigation. Further, the California Privacy Rights
Act, or the CPRA, generally went into effect in January 2023, and significantly amends the CCPA and imposes additional
data protection obligations on covered businesses, including additional consumer rights processes, limitations on data
uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data. It also created a new
California data protection agency authorized to issue substantive regulations and could result in increased privacy and
information security enforcement. Additional compliance investment and potential business process changes may be
required. The CCPA, the CPRA and other domestic privacy and data protection laws and regulations may increase our
compliance costs and potential liability.
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Our operations abroad may also be subject to increased scrutiny or attention from data protection authorities. For
example, the GDPR imposes stringent requirements for processing the personal data of individuals within the European
Economic Area, or EEA, which consists of the 27 EU member states plus Norway, Lichtenstein and Iceland. Companies
that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory
enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or up to 4% of
the total worldwide annual turnover of the relevant undertaking in the preceding financial year, whichever is higher, and
other administrative penalties.
Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries
that have not been found to provide adequate protection to such personal data, including the U.S. In July 2020, the Court of
Justice of the European Union, or CJEU, limited how organizations could lawfully transfer personal data from the EEA to
the U.S. by invalidating the Privacy Shield for purposes of international transfers and imposing further restrictions on the
use of standard contractual clauses (a standard form of contract approved by the European Commission as an adequate
personal data transfer mechanism, and potential alternative to the Privacy Shield), or SCCs. In March 2022, the U.S. and
EU announced a new regulatory regime intended to replace the invalidated regulations; however, this new EU-U.S. Data
Privacy Framework has not been implemented beyond an executive order signed by President Biden on October 7, 2022 on
Enhancing Safeguards for United States Signals Intelligence Activities. European court and regulatory decisions
subsequent to the CJEU decision of July 2020 have taken a restrictive approach to international data transfers. As
supervisory authorities issue further guidance on personal data export mechanisms, including circumstances where the
SCCs cannot be used, and/or start taking enforcement action, we could suffer additional costs, complaints and/or regulatory
investigations or fines. If, owing to the restriction or perceived restriction of personal data transfers, we are otherwise
unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner
in which we provide our services, the geographical location or segregation of our relevant systems and operations, and
could adversely affect our financial results.
Further, we are subject to the UK data protection regime, which imposes separate but similar obligations to those
under the GDPR and comparable penalties, including fines of up to £17.5 million or 4% of a noncompliant company’s
global annual revenue for the preceding financial year, whichever is greater. As we continue to expand into other foreign
countries and jurisdictions, we may be subject to additional laws and regulations that may affect how we conduct business.
Although we work to comply with applicable laws, regulations and standards, as well as our contractual
obligations and other legal obligations, relating to data privacy and security, these requirements are evolving and may be
modified, interpreted and applied in an inconsistent manner from one jurisdiction and/or organization to another, and may
conflict with one another or other legal obligations with which we must comply. Any failure or perceived failure by us or
our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such
requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and
liability to us, damage our reputation, and adversely affect our business and results of operations.
We are subject to environmental, health and safety laws and regulations, and we may become exposed to liability
and substantial expenses in connection with environmental compliance or remediation activities.
Our operations, including our development, testing and manufacturing activities, are subject to numerous
environmental, health and safety laws and regulations. These laws and regulations govern, among other things, the
controlled use, handling, release and disposal of and the maintenance of a registry for, hazardous materials and biological
materials, such as chemical solvents, human cells, carcinogenic compounds, mutagenic compounds and compounds that
have a toxic effect on reproduction, laboratory procedures and exposure to blood-borne pathogens. If we fail to comply
with such laws and regulations, we could be subject to fines or other sanctions. Additionally, if environmental regulations
are enacted that restrict our ability to use one or more of the materials or compounds necessary to manufacture our
product candidates, and we are unable to find suitable alternatives or such alternatives require additional testing or will
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extend the manufacturing timeline, then we may be unable to manufacture our product candidates in a timely manner, or
at all.
We may be subject to environmental liability inherent in our current and historical activities, including liability
relating to releases of or exposure to hazardous or biological materials. Environmental, health and safety laws and
regulations are becoming more stringent. We may be required to incur substantial expenses in connection with future
environmental compliance or remediation activities, in which case, our production efforts or those of our third-party
manufacturers may be interrupted or delayed.
Due to our international operations, we are subject to anti-corruption laws, as well as export control laws, customs
laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject
to civil or criminal penalties, other remedial measures and legal expenses.
Our operations are subject to anti-corruption laws, including the UK Bribery Act 2010, or Bribery Act; the U.S.
Foreign Corrupt Practices Act, or FCPA; and other anti-corruption laws that apply in countries where we do business and
may do business in the future. The Bribery Act, FCPA, and these other laws generally prohibit us, our officers and our
employees and intermediaries from bribing, being bribed by, or providing prohibited payments or anything else of value
to government officials or other persons to obtain or retain business or gain some other business advantage. We may in
the future operate in jurisdictions that pose a high risk of potential Bribery Act or FCPA violations, and we may
participate in collaborations and relationships with third parties whose actions could potentially subject us to liability
under the Bribery Act, FCPA, or local anti-corruption laws. In addition, we cannot predict the nature, scope, or effect of
future regulatory requirements to which any of our international operations might be subject or the manner in which
existing laws might be administered or interpreted.
We also are subject to other laws and regulations governing any international operations, including regulations
administered by the governments of the UK and the U.S., and authorities in the EU, including applicable export control
regulations, economic sanctions on countries and persons, customs requirements and currency exchange regulations, or,
collectively, the Trade Control laws.
There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-
corruption laws, including the Bribery Act, the FCPA, or other legal requirements, including Trade Control laws. If we
are not in compliance with the Bribery Act, the FCPA, and other anti-corruption laws or Trade Control laws, we may be
subject to criminal and civil penalties, disgorgement, and other sanctions and remedial measures and legal expenses. Any
investigation of any potential violations of the Bribery Act, the FCPA, other anti-corruption laws, or Trade Control laws
by UK, U.S., or other authorities, even if it is ultimately determined that we did not violate such laws, could be costly and
time-consuming, require significant personnel resources, and harm our reputation.
We have established internal controls to detect and prevent violations of applicable anti-corruption laws and to
remedy any weaknesses identified. There can be no assurance, however, that the policies and procedures will be followed
at all times or effectively detect and prevent violations of the applicable laws by one or more of our employees,
consultants, agents, or collaborators and, as a result, we could be subject to fines, penalties, or prosecution.
Risks Related to Commercialization
We face significant competition in an environment of rapid technological change, and there is a possibility that our
competitors may achieve regulatory approval before us or develop therapies that are safer or more advanced or
effective than ours, which may harm our financial condition and our ability to successfully market or commercialize
any product candidates we may develop.
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The development and commercialization of new gene therapy products is highly competitive. Moreover, the gene
regulation and manufacturing fields are characterized by rapidly changing technologies and a strong emphasis on
intellectual property. We may face competition with respect to any product candidates that we may seek to develop or
commercialize in the future from major pharmaceutical companies, specialty pharmaceutical companies, and
biotechnology companies worldwide. Potential competitors also include academic institutions, government agencies, and
other public and private research organizations that conduct research, seek patent protection, and establish collaborative
arrangements for research, development, manufacturing, and commercialization.
There are a number of large pharmaceutical and biotechnology companies that currently market and sell products
or are pursuing the development of products for the treatment of the disease indications for which we have research
programs, including inherited retinal diseases and neurodegenerative diseases. Some of these competitive products and
therapies are based on scientific approaches that are similar to our approach, and others are based on entirely different
approaches. Differences in the scientific approaches may create confusion or uncertainty among clinical trial investigators
or patient populations, which could delay or hinder enrollment or initiation of our clinical trials.
Our platform and products focus on the development of gene therapies and gene regulation technology. In 2017,
the FDA approved the first gene treatment for RPE65-associated retinal disease, Luxturna, a commercially available
product developed by Spark Therapeutics, Inc., which was purchased by Roche. There are a number of other companies
developing ocular gene therapy products, including Applied Genetic Technologies Corporation, and 4D Molecular
Therapeutics, Inc. There are a number of companies developing gene therapy products for neurodegenerative diseases,
including Voyager Therapeutics, Inc., Brain Neurotherapy Bio, Inc., Axovant Gene Therapies Ltd. and Prevail
Therapeutics Inc. (which was purchased by Eli Lilly and Company). In addition to competition from other gene therapies,
any products we may develop may also face competition from other types of therapies, such as small molecule, antibody,
or protein therapies. Many of our current or potential competitors, either alone or with their collaboration partners, have
greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting
clinical trials, obtaining regulatory approvals, and marketing approved products than we do. Mergers and acquisitions in
the pharmaceutical, biotechnology, and gene therapy industries may result in even more resources being concentrated
among a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified
scientific, manufacturing and management personnel and establishing clinical trial sites and patient enrollment in clinical
trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Our commercial opportunity
could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have
fewer or less severe side effects, are more convenient, or are less expensive than any products that we may develop,
limiting demand or the price we are able to charge, or that could render any products that we may develop obsolete or
non-competitive. Our competitors also may obtain FDA, MHRA or other regulatory approval for their products more
rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position
before we are able to enter the market. In addition, as a result of the expiration or successful challenge of our patent
rights, we could face more litigation with respect to the validity and/or scope of patents relating to our competitors’
products.
The successful commercialization of our product candidates will depend in part on the extent to which
governmental authorities and health insurers establish coverage, adequate reimbursement levels and pricing
policies. Failure to obtain or maintain coverage and adequate reimbursement for our product candidates, if
approved, could limit our ability to market those products and decrease our ability to generate revenue.
The availability of coverage and adequacy of reimbursement by governmental healthcare programs such as
Medicare and Medicaid, private health insurers and other third-party payors are essential for most patients to be able to
afford medical services and pharmaceutical products such as our product candidates, assuming FDA approval. Our ability
to achieve acceptable levels of coverage and reimbursement for our products or procedures using our products by
governmental authorities, private health insurers and other organizations will have an effect on our ability to successfully
commercialize our product candidates. Obtaining coverage and adequate reimbursement for our products may be
particularly difficult because of the higher prices often associated with drugs administered under the supervision of a
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physician. Separate reimbursement for the product itself or the treatment or procedure in which our product is used may
not be available. A decision by a third-party payor not to cover or separately reimburse for our products or procedures
using our products, could reduce physician utilization of our products if approved. Assuming there is such coverage by a
third-party payor, the resulting reimbursement payment rates may not be adequate or may require co-payments that
patients find unacceptably high. We cannot be sure that coverage and reimbursement in the United States, the UK, the EU
or elsewhere will be available for our product candidates or any product that we may develop, and any reimbursement
that may become available may not be adequate or may be decreased or eliminated in the future.
Third-party payors increasingly are challenging prices charged for pharmaceutical products and services, and
many third-party payors may refuse to provide coverage and reimbursement for particular drugs or biologics when an
equivalent generic drug, biosimilar or a less expensive therapy is available. It is possible that a third-party payor may
consider our product candidates as substitutable and only offer to reimburse patients for the less expensive product. Even
if we show improved efficacy or improved convenience of administration with our product candidates, pricing of existing
third-party therapeutics may limit the amount we will be able to charge for our product candidates. These payors may
deny or revoke the reimbursement status of a given product or establish prices for new or existing marketed products at
levels that are too low to enable us to realize an appropriate return on our investment in our product candidates. If
reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize
our product candidates and may not be able to obtain a satisfactory financial return on our product candidates.
There is significant uncertainty related to the insurance coverage and reimbursement of newly-approved products.
In the United States, third-party payors, including private and governmental payors, such as the Medicare and Medicaid
programs, play an important role in determining the extent to which new drugs and biologics will be covered. The
Medicare and Medicaid programs increasingly are used as models in the United States for how private payors and other
governmental payors develop their coverage and reimbursement policies for drugs and biologics. Some third-party payors
may require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse
healthcare providers who use such therapies. We cannot predict at this time what third-party payors will decide with
respect to the coverage and reimbursement for our product candidates.
No uniform policy for coverage and reimbursement for products exists among third-party payors in the United
States. Therefore, coverage and reimbursement for products can differ significantly from payor to payor. As a result, the
coverage determination process is often a time-consuming and costly process that will require us to provide scientific and
clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and
adequate reimbursement will be applied consistently or obtained in the first instance. Furthermore, rules and regulations
regarding reimbursement change frequently, in some cases on short notice.
Outside the United States, international operations are generally subject to extensive governmental price controls
and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe and other
countries have and will continue to put pressure on the pricing and usage of our product candidates. In many countries,
the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other
countries allow companies to fix their own prices for medical products but monitor and control company profits.
Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to
charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our product
candidates may be reduced compared with the United States and may be insufficient to generate commercially-reasonable
revenue and profits.
Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or
reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly
approved products and, as a result, they may not cover or provide adequate payment for our product candidates. We
expect to experience pricing pressures in connection with the sale of our product candidates due to the trend toward
managed health care, the increasing influence of health maintenance organizations and additional legislative changes. The
downward pressure on healthcare costs in general, particularly prescription drugs and biologics and surgical
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procedures and other treatments, has become intense. As a result, increasingly high barriers are being erected to the entry
of new products.
Even if our product candidates receive marketing approval, they may fail to achieve market acceptance by
physicians, patients, third-party payors or others in the medical community necessary for commercial success.
If our product candidates receive marketing approval, they may nonetheless fail to gain sufficient market
acceptance by physicians, patients, third-party payors and others in the medical community. If they do not achieve an
adequate level of acceptance, we may not generate significant product revenues or become profitable. The degree of
market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors,
including but not limited to:
● the efficacy and potential advantages compared to alternative treatments;
● effectiveness of sales and marketing efforts;
● the cost of treatment in relation to alternative treatments, including any similar generic treatments;
● our ability to offer our product candidates for sale at competitive prices;
● the convenience and ease of administration;
● the willingness of the target patient population to try new therapies and of physicians to prescribe these
therapies;
● the strength of marketing and distribution support, and publicity concerning our products or competing
products and treatments;
● the timing of market introduction of competitive products;
● the availability of third-party coverage and adequate reimbursement;
● product labeling or product insert requirements of the FDA, MHRA, EMA or other regulatory
authorities, including any limitations or warnings contained in a product’s approved labeling;
● the prevalence and severity of any side effects; and
● any restrictions on the use of our product together with other medications.
Because we expect sales of our product candidates, if approved, to generate substantially all of our product
revenues for a substantial period, the failure of these product candidates to find market acceptance would harm our
business and could require us to seek additional financing.
If we are unable to establish sales, marketing and distribution capabilities either on our own or in collaboration
with third parties, we may not be successful in commercializing our product candidates or realizing the synergies in
the target indications of our programs, even if they are approved.
We do not have any infrastructure for the sales, marketing or distribution of our products, and the cost of
establishing and maintaining such an organization may exceed the cost-effectiveness of doing so or we may seek
collaborative arrangements or external funding to commercialize our product candidates. For example, Janssen will be
solely responsible for the commercialization of botaretigene sparoparvovec, AAV-CNGB3 and AAV-CNGA3 pursuant
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to our Collaboration Agreement with them. There are significant expenses and risks involved with establishing our own
sales, marketing and distribution capabilities, including our ability to hire, retain and appropriately incentivize qualified
individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, and effectively
manage a geographically dispersed sales and marketing team. Any failure or delay in the development of such capabilities
could delay any product launch, which would adversely impact the commercialization of our product candidates.
Additionally, if any commercial launch is delayed or does not occur for any reason, we would have prematurely or
unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we
cannot retain or reposition our sales and marketing personnel.
We may not have the resources in the foreseeable future to allocate to the sales and marketing of our product
candidates in certain markets. Therefore, our future sales in these markets will largely depend on our ability to enter into
and maintain collaborative relationships for such capabilities, the collaborator’s strategic interest in the product and such
collaborator’s ability to successfully market and sell the product. We may pursue collaborative arrangements regarding
the sale and marketing of AAV-GAD, AAV-RPE65, AAV-hAQP1 or other future gene therapy programs, if approved, for
the United States and/or certain markets overseas; however, there can be no assurance that we will be able to establish or
maintain such collaborative arrangements, or if able to do so, that they will have effective sales forces.
If we are unable to build our own sales force or negotiate or maintain a collaborative relationship for the
commercialization of our product candidates, we may be forced to delay potential commercialization or reduce the scope
of our sales or marketing activities. If we elect to increase our expenditures to fund commercialization activities
internationally, we will need to obtain additional capital, which may not be available to us on acceptable terms, or at all.
We could enter into arrangements with collaborative partners at an earlier stage than otherwise would be ideal and we
may be required to relinquish rights or otherwise agree to terms unfavorable to us, any of which may have an adverse
effect on our business, operating results and prospects.
Some indications targeted by our ophthalmology programs are rare, but we anticipate realizing synergies in
commercializing our IRD product candidates, should they be approved. Failure to realize synergies in our sales,
marketing and distribution efforts may harm our commercialization efforts.
If we or our collaborators are unable to establish or maintain adequate sales, marketing and distribution
capabilities, we will not be successful in commercializing our product candidates and may not become profitable and may
incur significant additional losses. We will be competing with many companies that currently have extensive and well-
funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and
sales functions, we may be unable to compete successfully against these more established companies.
If any of our products are commercialized outside of the United States, the UK or the EU, a variety of risks
associated with international operations could adversely affect our business.
If any of our products are approved for commercialization, we have entered into, and intend to enter into,
agreements with third parties to market them in certain jurisdictions outside the United States, the UK and the EU, such
as under our Collaboration Agreement with Janssen. We expect that we and our third-party collaborators will be subject
to additional risks related to international pharmaceutical operations, including:
● different regulatory requirements for drug and biologic approvals and rules governing drug and biologic
commercialization in foreign countries;
● tighter restrictions on privacy and the collection and use of patient data;
● reduced or loss of protection for intellectual property rights;
● foreign reimbursement, pricing and insurance regimes;
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● unexpected changes in tariffs, trade barriers and regulatory requirements;
● economic weakness, including inflation, or political instability in particular foreign economies and
markets;
● foreign currency fluctuations, which could result in increased operating expenses and reduced revenues,
and other obligations incident to doing business in another country;
● business interruptions resulting from geopolitical actions, including war and terrorism, or widespread
health emergencies, such as the COVID-19 pandemic, or natural disasters including earthquakes,
typhoons, floods and fires, or from economic or political instability;
● greater difficulty with enforcing our contracts;
● potential noncompliance with the FCPA, the Bribery Act and similar anti-bribery and anticorruption
laws in other jurisdictions;
● production shortages resulting from any events affecting raw material supply or manufacturing
capabilities abroad; and
● workforce uncertainty in countries where labor unrest is more common than in the United States and
compliance with tax, employment, immigration and labor laws for employees living or traveling abroad.
We have no prior experience in these areas and we may rely on other third parties to help us establish our
international commercialization operations. In addition, there are complex regulatory, tax, labor and other legal
requirements imposed by individual countries in Europe with which we and our third-party collaborators will need to
comply. If we are unable to successfully manage the challenges of international expansion and operations, our business
and operating results could be harmed.
Any product candidates for which we intend to seek approval as biologic products may face competition sooner
than anticipated.
The ACA includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which
created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-
licensed reference biological product. Under the BPCIA, an application for a biosimilar product may not be submitted to
the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the
approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the
reference product was first licensed by the FDA. During this 12-year period of exclusivity, another company may still
market a competing version of the reference product if the FDA approves a full BLA for the competing product
containing the sponsor’s own pre-clinical data and data from adequate and well-controlled clinical trials to demonstrate
the safety, purity and potency of the other company’s product.
We believe that any of our product candidates approved as a biological product under a BLA should qualify for
the 12-year period of exclusivity. However, there is a risk that any of our product candidates approved as a biological
product under a BLA would not qualify for the 12-year period of exclusivity or that this exclusivity could be shortened
due to Congressional action or otherwise, or that the FDA will not consider our product candidates to be reference
products for competing products, potentially creating the opportunity for generic competition sooner than anticipated.
Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of
recent litigation. Jurisdictions outside the United States have established abbreviated pathways for regulatory approval
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of biological products that are biosimilar to earlier approved reference products. For example, the EU has had an
established regulatory pathway for biosimilars since 2006. Moreover, the extent to which a biosimilar, once licensed, will
be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-
biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still
developing.
If competitors are able to obtain marketing approval for biosimilars referencing our products, our products may
become subject to competition from such biosimilars, with the attendant competitive pressure and consequences.
Risks Related to Our Dependence on Third Parties
If our cGMP and GMP manufacturing facilities are unable to supply our product candidates for all of our current
preclinical, clinical and potential commercial needs, we will be forced to seek out third-party manufacturers. We
currently contract with third parties for the manufacture of plasmid used in producing our product candidates.
Relying on third parties increases the risk that we will not have sufficient quantities of such materials, product
candidates, or any medicines that we may develop and commercialize, or that such supply will not be available to us at
an acceptable cost, which could delay, prevent, or impair our development or commercialization efforts.
We produce our product candidates in our cGMP viral vector manufacturing facility completed in early 2018 and
we completed the acquisition of our second, large scale cGMP viral vector manufacturing facility and our first cGMP
plasmid and DNA production facility in Shannon, Ireland in January 2021 to expand our manufacturing and supply chain
capabilities. However, if our current facility is damaged, suffers any form of delay or regulatory challenges, we
experience slowdowns or problems with the development and completion of our new facilities or we are unable to scale
our internal manufacturing capabilities to meet demand for our product candidates, we will need to contract with third-
party manufacturers to produce our product candidates. While we now have our own plasmid manufacturing capabilities
in our Shannon, Ireland facilities, we may also rely on third-party manufacturers from time to time for the manufacture of
plasmid used in the production of some of our product candidates. We do not have a long-term supply agreement with any
of the third-party manufacturers, and we purchase our required supply on a purchase order basis.
We and our third-party manufacturers may also encounter difficulties or delays in manufacturing of our product
candidates or the plasmid used in the production of our product candidates. Geopolitical actions, natural disaster or a
widespread health emergency, such as the COVID-19 pandemic, could impact our supply chain. To the extent that we or
our third-party manufacturers are located in geographies affected by these matters, it may result in the temporary closing
of manufacturing facilities and may increase the costs associated with manufacturing our product candidates.
We may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails
additional risks, including:
● the possible breach of the manufacturing agreement by the third party, including failure to provide
appropriate quantities in a timely manner;
● the possible termination or nonrenewal of the agreement by the third party at a time that is costly or
inconvenient for us; and
● reliance on the third party for regulatory compliance, quality assurance, safety, and pharmacovigilance
and related reporting.
We and our third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory
requirements that might be required by the FDA, MHRA or EMA. Our failure, or the failure of our third-party
manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including fines,
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injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocations, seizures or recalls of
product candidates or medicines, operating restrictions, and criminal prosecutions, any of which could adversely affect
supplies of our candidates and harm our business, financial condition, results of operations, and prospects.
Any therapies that we may develop may compete with other product candidates and products for access to
manufacturing facilities. There are a limited number of manufacturers that operate under cGMP or similar regulations and
that might be capable of manufacturing for us. Any performance failure on the part of our existing or future
manufacturers could delay clinical development or marketing approval.
Our current and anticipated future dependence upon others for the manufacture of any product candidates we may
develop or any components required for the manufacture of our product candidates may adversely affect our future profit
margins and our ability to commercialize any product candidates that receive marketing approval on a timely and
competitive basis.
We have in the past, and may in the future, collaborate with third parties for the development, manufacture and
commercialization of our product candidates. We may not succeed in establishing and maintaining
collaborative relationships, which may significantly limit our ability to develop and commercialize our product
candidates successfully, if at all.
We have entered into collaboration agreements with third parties for the development and commercialization of
our product candidates, including our Collaboration Agreement with Janssen for the development and commercialization
of AAV-CNGB3, AAV-CNGA3 and botaretigene sparoparvovec. We have also entered into a manufacturing research
collaboration agreement with Janssen to further develop processes for manufacturing AAV viral vectors. We may seek
additional collaborative relationships in the future. Failure to obtain a collaborative relationship for our product
candidates may significantly impair their commercial potential. We also may need to enter into collaborative relationships
to provide funding to support our other research and development programs. The process of establishing and maintaining
collaborative relationships is difficult, time-consuming and involves significant uncertainty, such as:
● a collaboration partner may shift its priorities and resources away from our product candidates due to a
change in business strategies, or a merger, acquisition, sale or downsizing;
● a collaboration partner may seek to renegotiate or terminate their relationships with us due to
unsatisfactory clinical results, manufacturing issues, a change in business strategy, a change of control
or other reasons;
● a collaboration partner may cease development in therapeutic areas which are the subject of our strategic
collaboration;
● a collaboration partner may not devote sufficient capital or resources towards our product candidates;
● a collaboration partner may change the success criteria for a product candidate thereby delaying or
ceasing development of such candidate;
● a significant delay in initiation of certain development activities by a collaboration partner will also
delay payment of milestones tied to such activities, thereby impacting our ability to fund our own
activities;
● a collaboration partner could develop a product that competes, either directly or indirectly, with our
product candidate;
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● a collaboration partner with commercialization obligations may not commit sufficient financial or
human resources to the marketing, distribution or sale of a product;
● a collaboration partner with manufacturing responsibilities may encounter regulatory, resource or quality
issues and be unable to meet demand requirements;
● a collaboration partner may terminate a strategic alliance;
● a dispute may arise between us and a partner concerning
the research, development or
commercialization of a product candidate resulting in a delay in milestones, royalty payments or
termination of an alliance and possibly resulting in costly litigation or arbitration which may divert
management attention and resources; and
● a partner may use our products or technology in such a way as to make us subject to litigation with a
third party.
If any collaborator fails to fulfill its responsibilities in a timely manner, or at all, our research, clinical
development, manufacturing or commercialization efforts related to that collaboration could be delayed or terminated, or
it may be necessary for us to assume responsibility for expenses or activities that would otherwise have been the
responsibility of our collaborator. If we are unable to establish and maintain collaborative relationships on acceptable
terms or to successfully transition terminated collaborative agreements, we may have to delay or discontinue further
development of one or more of our product candidates, undertake development and commercialization activities at our
own expense or find alternative sources of capital.
We have relied, and we expect to continue to rely, on third parties to conduct, supervise and monitor our preclinical
studies and clinical trials, and if these third parties perform in an unsatisfactory manner, our business could be
harmed.
We expect to rely on CROs, clinical trial sites, and other vendors to ensure our preclinical studies and clinical
trials are conducted properly and on time. We may also engage third parties such as clinical data management
organizations, medical institutions and clinical investigators to conduct or assist in our clinical trials or other preclinical
and clinical research and development work. While we will have agreements governing their activities, we will have
limited influence over their actual performance. We will control only certain aspects of our third-party service providers’
activities. Nevertheless, we will be responsible for ensuring that each of our preclinical studies and clinical trials is
conducted in accordance with the applicable protocol, legal, quality, regulatory and scientific standards. Our reliance on
these third parties does not relieve us of our regulatory responsibilities. For example, we are conducting the Phase 3
Lumeos clinical trial of botaretigene sparoparvovec for the treatment of patients with XLRP caused by mutations in the
RPGR gene at multiple clinical trial sites in North America and Europe. If any locations terminate the clinical trial, we
may be required to find another party to conduct any new trials. We may be unable to find a new party to conduct new
trials of our product candidates or obtain clinical supply of our product candidates or AAV vectors for such trials. If we
elect to internalize some or all activities related to the conduct of our preclinical studies or clinical trials that are currently
performed by our third-party service providers, or if we are required to do so due to a service provider’s termination of
our relationship, then we may be required to source additional technology and personnel in order to perform the relevant
activities. We may be unsuccessful in our efforts to internalize some or all relevant activities, either on the desired
timeline or at all.
Our third-party service providers are not our employees, and we are therefore unable to directly monitor whether
or not they devote sufficient time, attention, expertise and resources to our clinical and nonclinical programs. These third-
party service providers may also have relationships with other commercial entities, including our competitors, for whom
they may also be conducting clinical trials or other drug development activities that could harm our competitive position.
If our third-party service providers do not successfully carry out their contractual duties or obligations or fail to meet
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expected deadlines, or if the quality or accuracy of the preclinical or clinical data they obtain is compromised due to the
failure to adhere to our clinical protocols or regulatory requirements, or for any other reasons, our preclinical studies or
clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or
successfully commercialize our product candidates. As a result, our financial results and the commercial prospects for our
product candidates could be harmed, our costs could increase, and our ability to generate revenues could be delayed.
If our relationship with any CROs terminate, we may not be able to enter into arrangements with alternative CROs
or do so on commercially reasonable terms. Switching or adding additional CROs involves substantial cost and requires
management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a
result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though
we intend to carefully manage our relationships with our CROs, there can be no assurance that we will not encounter
challenges or delays in the future or that these delays or challenges will not have an adverse impact on our business,
financial condition and prospects.
Risks Related to Intellectual Property
We depend on proprietary technology licensed from others. If we lose our existing licenses or are unable to acquire
or license additional proprietary rights from third parties, we may not be able to continue developing our product
candidates.
We currently in-license certain intellectual property from research institutions, universities and other third parties.
We may also enter into additional agreements, including license agreements, with other parties in the future that impose
diligence, development and commercialization timelines, milestone payments, royalties, insurance and other obligations
on us. If we fail to comply with our obligations to any of our current or future collaborators, our counterparties may have
the right to terminate these agreements, in which event we might not be able to develop, manufacture or market any
product candidate that is covered by these agreements, which could adversely affect the value of the product candidate
being developed under any such agreement. Termination of these agreements or reduction or elimination of our rights
under these agreements may result in our having to negotiate new or reinstated agreements with less favorable terms, or
cause us to lose our rights under these agreements, including our rights to important intellectual property or technology.
We may rely on other third parties from whom we license proprietary technology to file and prosecute patent
applications and maintain patents and otherwise protect the intellectual property we license from them. We may have
limited control over these activities or any other intellectual property that may be related to our in-licensed intellectual
property. For example, we cannot be certain that such activities by these licensors will be conducted in compliance with
applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights. We
may have limited control over the manner in which our licensors initiate an infringement proceeding against a third-party
infringer of the intellectual property rights, or defend certain of the intellectual property that may be licensed to us. It is
possible that the licensors’ infringement proceedings or defense activities may be less vigorous than if we conduct them
ourselves. The licensing and acquisition of third-party intellectual property rights is a competitive practice, and
companies that may be more established, or have greater resources than we do, may also be pursuing strategies to license
or acquire third-party intellectual property rights that we may consider necessary or attractive in order to commercialize
our product candidates. More established companies may have a competitive advantage over us due to their larger size
and cash resources or greater clinical development and commercialization capabilities. There can be no assurance that we
will be able to successfully complete such negotiations and ultimately acquire the rights to the intellectual property
surrounding the additional product candidates that we may seek to acquire. If we are unable to obtain and maintain patent
protection for our technology and product candidates or if the scope of the patent protection obtained is not sufficiently
broad, we may not be able to compete effectively in our markets.
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If we are unable to obtain and maintain patent protection for our technology and product candidates or if the scope
of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.
We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the
intellectual property related to our proprietary technologies, product candidate development programs and product
candidates. Our success depends in part on our ability to secure and maintain patent protection in the United States and
other countries with respect to our current product candidates and any future product candidates we may develop. We
seek to protect our proprietary position by filing or collaborating with our licensors to file patent applications in the
United States and abroad related to our proprietary technologies, development programs and product candidates. The
patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary
or desirable patent applications at a reasonable cost or in a timely manner. Moreover, the issuance, scope, validity,
enforceability and commercial value of our patent rights are uncertain.
It is also possible that we might fail to identify patentable aspects of our research and development output before it
is too late to obtain patent protection. We may not have the right to control the preparation, filing, and prosecution of
patent applications, or to maintain the rights to patents licensed to third parties. Therefore, these patents and patent
applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. The patent
applications that we own or in-license may fail to result in issued patents with claims that cover our proprietary products
and technology, including current product candidates, any future product candidates we may develop, and our gene
regulation technology in the United States or in other countries, in whole or in part. Alternately, our existing patents and
any future patents we obtain may not be sufficiently broad to prevent others from using our technology or from
developing competing products and technologies. There is no assurance that all potentially relevant prior art relating to
our patents and patent applications has been found, which can prevent a patent from issuing from a pending patent
application or later invalidate or narrow the scope of an issued patent. For example, publications of discoveries in the
scientific literature often lag behind the actual discoveries, and patent applications in the United States and other
jurisdictions are typically not published until 18 months after filing or, in some cases, not at all. Therefore, we cannot
know with certainty whether we were the first to make the inventions claimed in our patents or pending patent
applications, or that we were the first to file for patent protection of such inventions. In addition, obtaining and
maintaining our patent protection depends on compliance with various procedural, document submission, fee payment
and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or
eliminated for non-compliance with these requirements. Even if patents do successfully issue and even if such patents
cover our current product candidates, any future product candidates we may develop and our gene regulation technology,
third parties may challenge their validity, enforceability or scope thereof, which may result in such patents being
narrowed, invalidated, or held unenforceable. Any successful challenge to these patents or any other patents owned by or
licensed to us could deprive us of rights necessary for the successful commercialization of any of our product candidates
or gene regulation technology. Our competitors may be able to circumvent our patents by developing similar or
alternative product candidates in a non-infringing manner. Further, if we encounter delays in regulatory approvals, the
period of time during which we could market a product candidate and our gene regulation technology under patent
protection could be reduced.
If the patent applications we hold or have in-licensed with respect to our development programs and product
candidates fail to issue, if their validity, breadth or strength of protection is threatened, or if they fail to provide
meaningful exclusivity for any of our current or future product candidates or technology, it could dissuade companies
from collaborating with us to develop product candidates, encourage competitors to develop competing products or
technologies and threaten our ability to commercialize future product candidates. Any such outcome could harm our
business.
The patent position of biotechnology and pharmaceutical companies is uncertain, involves complex legal and
factual questions, and is characterized by the existence of large numbers of patents and frequent litigation based on
allegations of patent or other intellectual property infringement or violation. In addition, the laws of jurisdictions outside
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the United States may not protect our rights to the same extent as the laws of the United States. Changes in either the
patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our
patents or narrow the scope of our patent protection.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned
and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges
may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held
unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or
identical technology and products, or limit the duration of the patent protection of our technology and products. Thus,
even if our patent applications issue as patents, they may not issue in a form that will provide us with meaningful
protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage.
Moreover, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years
after it is filed. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited.
Without patent protection for our current or future product candidates, we may be open to competition from generic
versions of such products. Given the amount of time required for the development, testing and regulatory review of new
product candidates, patents protecting such candidates might expire before or shortly after such candidates are
commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude
others from commercializing products similar or identical to ours.
Third parties may assert claims against us alleging infringement of their patents and proprietary rights, or we may
need to become involved in lawsuits to defend or enforce our patents, either of which could result in substantial costs
or loss of productivity, delay or prevent the development and commercialization of our product candidates, prohibit
our use of proprietary technology or sale of products or put our patents and other proprietary rights at risk.
Our commercial success depends, in part, upon our ability to develop, manufacture, market and sell our product
candidates without alleged or actual infringement, misappropriation or other violation of the patents and proprietary rights
of third parties. However, our research, development and commercialization activities may be subject to claims that we
infringe or otherwise violate patents or other intellectual property rights owned or controlled by third parties. Litigation
relating to infringement or misappropriation of patent and other intellectual property rights in the pharmaceutical and
biotechnology industries is common, including patent infringement lawsuits, interferences, oppositions and inter partes
reviews, and reexamination proceedings before the U.S. Patent and Trademark Office, or USPTO, and corresponding
foreign patent offices. In addition, many companies in intellectual property-dependent industries, including the
biotechnology and pharmaceutical industries, have employed intellectual property litigation as a means to gain an
advantage over their competitors. Numerous U.S., EU and foreign issued patents and pending patent applications, which
are owned by third parties, exist in the fields in which we are developing product candidates, and as the biotechnology
and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be
subject to claims of infringement of the intellectual property rights of third parties. Some claimants may have
substantially greater resources than we do and may be able to sustain the costs of complex intellectual property litigation
to a greater degree and for longer periods of time than we could. In addition, patent holding companies that focus solely
on extracting royalties and settlements by enforcing patent rights may target us.
We may be subject to third-party claims including infringement, interference or derivation proceedings, post-grant
review and inter partes review before the USPTO or similar adversarial proceedings or litigation in other jurisdictions.
Even if such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid,
enforceable and infringed, and the holders of any such patents may be able to block our ability to commercialize the
applicable product candidate unless we obtained a license under the applicable patents, or until such patents expire or are
finally determined to be invalid or unenforceable. In addition, third parties may obtain patents in the future and claim that
use of our technologies infringes upon these patents, and the holders of any such patents may be able to prohibit our use
of those compositions, formulations, methods of treatment, prevention or use or other technologies, effectively blocking
our ability to develop and commercialize the applicable product candidate until such patent expires or is finally
determined to be invalid or unenforceable or unless we obtained a license.
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In addition, defending such claims would cause us to incur substantial expenses and, if we are not successful in
defending such claims, it could cause us to pay substantial damages if we are found to be infringing a third party’s patent
rights. These damages potentially include increased damages (possibly treble damages) and attorneys’ fees if we are
found to have infringed such rights willfully. Further, if a patent infringement suit is brought against us or our third-party
service providers, our development, manufacturing or sales activities relating to the product or product candidate that is
the subject of the suit may be delayed or terminated. As a result of patent infringement claims, or in order to avoid
potential infringement claims, we may choose to seek, or be required to seek, a license from the third party, which may
require payment of substantial royalties or fees, or require us to grant a cross-license under our intellectual property
rights. These licenses may not be available on reasonable terms or at all. Even if a license can be obtained on reasonable
terms, the rights may be nonexclusive, which would give our competitors access to the same intellectual property rights.
If we are unable to enter into a license on acceptable terms, we could be prevented from commercializing one or more of
our product candidates, or forced to modify such product candidates, or to cease some aspect of our business operations,
which could harm our business significantly. We might also be forced to redesign or modify our product candidates so
that we no longer infringe the third-party intellectual property rights, which may result in significant cost or delay to us,
or which redesign or modification could be impossible or technically infeasible. Even if we were ultimately to prevail,
any of these events could require us to divert substantial financial and management resources that we would otherwise be
able to devote to our business.
Competitors may infringe our patents or other intellectual property. If we or one of our licensors were to initiate
legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could
counterclaim that our patent is invalid or unenforceable. If a defendant were to prevail on a legal assertion of invalidity or
unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may
cause us to incur significant expenses and could distract our technical and management personnel from their normal
responsibilities. In addition, because of the substantial amount of discovery required in connection with intellectual
property litigation, there is a risk that some of our confidential information could be compromised by disclosure during
this type of litigation. Such litigation or proceedings could substantially increase our operating losses and reduce our
resources available for development activities. We may not have sufficient financial or other resources to adequately
conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or
proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties
resulting from the initiation and continuation of patent litigation or other proceedings could have an adverse effect on our
ability to compete in the marketplace.
We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a
third-party patent, which might adversely affect our ability to develop, manufacture and market our product
candidates.
We cannot guarantee that any of our or our licensors’ patent searches or analyses, including but not limited to the
identification of relevant patents, analysis of the scope of relevant patent claims or determination of the expiration of
relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent
and pending application in the United States, the UK, the EU and elsewhere that is relevant to or necessary for the
commercialization of our product candidates in any jurisdiction. For example, in the United States, applications filed
before November 29, 2000 and certain applications filed after that date that will not be filed outside the United States
remain confidential until patents issue. Patent applications in the United States, the UK, the EU and elsewhere are
published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date
being commonly referred to as the priority date. Therefore, patent applications covering our product candidates could be
filed by others without our knowledge. Additionally, pending patent applications that have been published can, subject to
certain limitations, be later amended in a manner that could cover our product candidates or the use of our product
candidates. After issuance, the scope of patent claims remains subject to construction as determined by an interpretation
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of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the
scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our
product candidates. We may incorrectly determine that our product candidates are not covered by a third-party patent or
may incorrectly predict whether a third party’s pending application will issue with claims of relevant scope. Our
determination of the expiration date of any patent in the United States, the UK, the EU or elsewhere that we consider
relevant may be incorrect, which may negatively impact our ability to develop and market our product candidates. Our
failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market our
product candidates.
If we fail to correctly identify or interpret relevant patents, we may be subject to infringement claims. We cannot
guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we fail in any such
dispute, in addition to being forced to pay monetary damages, we may be temporarily or permanently prohibited from
commercializing our product candidates. We might, if possible, also be forced to redesign our product candidates in a
manner that no longer infringes third-party intellectual property rights. Any of these events, even if we were ultimately to
prevail, could require us to divert substantial financial and management resources that we would otherwise be able to
devote to our business.
Changes in patent laws or patent jurisprudence could diminish the value of patents in general, thereby impairing
our ability to protect our product candidates.
Obtaining and enforcing patents in the biotechnology and genetic medicine industries involve both technological
complexity and legal complexity. In addition, the Leahy-Smith America Invents Act, or the AIA, which was passed in
September 2011, resulted in significant changes to the U.S. patent system.
An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned from a
“first-to-invent” to a “first-to-file” system for deciding which party should be granted a patent when two or more patent
applications are filed by different parties claiming the same invention. Under a “first-to-file” system, assuming the other
requirements for patentability are met, the first inventor to file a patent application generally will be entitled to a patent on
the invention regardless of whether another inventor had made the invention earlier. A third party that files a patent
application in the USPTO after that date but before us could therefore be awarded a patent covering an invention of ours
even if we made the invention before it was made by the third party. This will require us to be cognizant of the time from
invention to filing of a patent application and diligent in filing patent applications, but circumstances could prevent us
from promptly filing patent applications on our inventions.
In addition, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not
have been invalidated if first challenged by the third party as a defendant in a district court action because of a lower
evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal courts necessary to
invalidate a patent claim. An adverse determination in any such proceeding could reduce the scope of, or invalidate, our
owned or in-licensed patent rights, allow third parties to commercialize our technology or products and compete directly
with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing
third-party patent rights.
Additionally, the U.S. Supreme Court has ruled on several patent cases in recent years either narrowing the scope
of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations, and
there are other open questions under patent law that courts have yet to decisively address. In addition to increasing
uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty
with respect to the value of patents, once obtained. Depending on decisions by Congress, the federal courts and the
USPTO, the laws and regulations governing patents could change in unpredictable ways and could weaken our ability to
obtain new patents or to enforce our existing patents and patents that we might obtain in the future. In addition, the
European patent system is relatively stringent in the type of amendments that are allowed during prosecution, but, the
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complexity and uncertainty of European patent laws has also increased in recent years. Complying with these laws and
regulations could limit our ability to obtain new patents that may be important for our business.
We enjoy only limited geographical protection with respect to certain patents and we may not be able to protect
our intellectual property rights throughout the world.
Filing, prosecuting and defending patents covering our product candidates in all countries throughout the world
would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be
less extensive than those in the United States. In-licensing patents covering our product candidates in all countries
throughout the world may similarly be prohibitively expensive, if such opportunities are available at all. And in- licensing
or filing, prosecuting and defending patents even in only those jurisdictions in which we develop or commercialize our
product candidates may be prohibitively expensive or impractical. Competitors may use our and our licensors’
technologies in jurisdictions where we have not obtained patent protection or licensed patents to develop their own
products and, further, may export otherwise infringing products to territories where we and our licensors have patent
protection, but enforcement is not as strong as that in the United States, the UK or the EU. These products may compete
with our product candidates, and our or our licensors’ patents or other intellectual property rights may not be effective or
sufficient to prevent them from competing.
The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws or
regulations in the United States, the UK and the EU, and many companies have encountered significant difficulties in
protecting and defending proprietary rights in such jurisdictions. Moreover, the legal systems of certain countries,
particularly certain developing countries, do not favor the enforcement of patents, trade secrets or other forms of
intellectual property, which could make it difficult for us to prevent competitors in some jurisdictions from marketing
competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign
jurisdictions, whether or not successful, are likely to result in substantial costs and divert our efforts and attention from
other aspects of our business, and additionally could put at risk our or our licensors’ patents of being invalidated or
interpreted narrowly, could increase the risk of our or our licensors’ patent applications not issuing, or could provoke
third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, while damages or other
remedies may be awarded to the adverse party, which may be commercially significant. If we prevail, damages or other
remedies awarded to us, if any, may not be commercially meaningful. Accordingly, our efforts, or the efforts of our
licensors or collaborators, to enforce intellectual property rights around the world may be inadequate to obtain a
significant commercial advantage from the intellectual property that we develop or license.
Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate
amount of time.
The term of any individual patent depends on applicable law in the country where the patent is granted. In the
United States, provided all maintenance fees are timely paid, a patent generally has a term of 20 years from its application
filing date or earliest claimed non-provisional filing date. Extensions may be available under certain circumstances, but
the life of a patent and, correspondingly, the protection it affords is limited. Even if we or our licensors obtain patents
covering our product candidates, when the terms of all patents covering a product expire, our business may become
subject to competition from competitive medications, including generic medications. Given the amount of time required
for the development, testing and regulatory review and approval of new product candidates, patents protecting such
candidates may expire before or shortly after such candidates are commercialized. As a result, our owned and licensed
patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or
identical to ours.
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If we do not obtain patent term extension in the United States under the Hatch-Waxman Act and in foreign
countries under similar legislation, thereby potentially extending the term of marketing exclusivity for our product
candidates, our business may be harmed.
In the United States, a patent that covers an FDA-approved drug or biologic may be eligible for a term extension
designed to restore the period of the patent term that is lost during the premarket regulatory review process conducted by
the FDA. Depending upon the timing, duration and conditions of FDA marketing approval of our product candidates, one
or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and
Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, which permits a patent term extension of up to five
years for a patent covering an approved product as compensation for effective patent term lost during product
development and the FDA regulatory review process. In the UK and the EU, our product candidates may be eligible for
term extensions based on similar legislation. In each of these jurisdictions, however, we may not receive an extension if
we fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy
applicable requirements. Even if we are granted such extension, the duration of such extension may be less than our
request. If we are unable to obtain a patent term extension, or if the term of any such extension is less than our request,
the period during which we can enforce our patent rights for that product will be essentially shortened and our
competitors may obtain approval to market competing products sooner. The resulting reduction in revenue from
applicable products could be substantial.
Our proprietary rights may not adequately protect our technologies and product candidates, and do not
necessarily address all potential threats to our competitive advantage.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual
property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive
advantage. The following examples are illustrative:
● others may be able to make products that are the same as or similar to our product candidates but that
are not covered by the claims of the patents that we own or have exclusively licensed;
● others, including inventors or developers of our owned or in-licensed patented technologies who may
become involved with competitors, may independently develop similar technologies that function as
alternatives or replacements for any of our technologies without infringing our intellectual property
rights;
● we or our licensors or our other collaboration partners might not have been the first to conceive and
reduce to practice the inventions covered by the patents or patent applications that we own, license or
will own or license;
● we or our licensors or our other collaboration partners might not have been the first to file patent
applications covering certain of the patents or patent applications that we or they own or have obtained a
license, or will own or will have obtained a license;
● we or our licensors may fail to meet obligations to the U.S. government with respect to in-licensed
patents and patent applications funded by U.S. government grants, leading to the loss of patent rights;
● issued patents that we own or exclusively license may not provide us with any competitive advantage, or
may be held invalid or unenforceable, as a result of legal challenges by our competitors; and
● our competitors might conduct research and development activities in countries where we do not have
patent rights, or in countries where research and development safe harbor laws exist, and then use the
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information learned from such activities to develop competitive products for sale in our major
commercial markets.
Our reliance on third parties may require us to share our trade secrets, which increases the possibility that our
trade secrets will be misappropriated or disclosed, and confidentiality agreements with employees and third parties
may not adequately prevent disclosure of trade secrets and protect other proprietary information.
We consider proprietary trade secrets, confidential know-how and unpatented know-how to be important to our
business. We may rely on trade secrets and confidential know-how to protect our technology, especially where patent
protection is believed by us to be of limited value. However, trade secrets and confidential know-how are difficult to
protect, and we have limited control over the protection of trade secrets and confidential know-how used by our licensors,
collaborators and suppliers. Because we have relied in the past on third parties to manufacture our product candidates,
because we may continue to do so in the future, and because we expect to collaborate with third parties on the
development of our current product candidates and any future product candidates we develop, we may, at times, share
trade secrets with them. We also conduct joint research and development programs that may require us to share trade
secrets under the terms of our research and development partnerships or similar agreements. Under such circumstances,
trade secrets and confidential know-how can be difficult to maintain as confidential.
To protect this type of information against disclosure or appropriation by competitors, our policy is to require our
employees, consultants, contractors and advisors to enter into confidentiality agreements and, if applicable, material
transfer agreements, consulting agreements or other similar agreements with us prior to beginning research or disclosing
proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential
information, including our trade secrets. However, current or former employees, consultants, contractors and advisers
may unintentionally or willfully disclose our confidential information to competitors, and confidentiality agreements may
not provide an adequate remedy in the event of unauthorized disclosure of confidential information. We may also be
subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed
confidential information of their former employers or other third parties. The need to share trade secrets and other
confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently
incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our
competitive position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets or
other unauthorized use or disclosure would impair our competitive position and may have an adverse effect on our
business and results of operations. Enforcing a claim that a third party obtained illegally and is using trade secrets and/or
confidential know-how is expensive, time consuming and unpredictable, and the enforceability of confidentiality
agreements may vary from jurisdiction to jurisdiction. Courts outside the United States are sometimes less willing to
protect proprietary information, technology and know-how.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition
in our markets of interest and our business may be adversely affected.
If our trademarks and trade names are not adequately protected, then we may not be able to build name
recognition in our markets of interest and our business may be adversely affected. Our trademark MeiraGTx has been
registered in the EU, UK and United States. We may not be able to protect our rights to these trademarks and trade
names, which we need to build name recognition among potential partners or customers in our markets of interest. At
times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand
identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark
infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our
unregistered trademarks or trade names. Over the long term, if we are unable to successfully register our trademarks and
trade names and establish name recognition based on our trademarks and trade names, then we may not be able to
compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights
related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could
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result in substantial costs and diversion of resources and could adversely impact our financial condition or results of
operations.
We may need to license or acquire additional intellectual property from third parties, and such intellectual property
may not be available or may not be available on commercially reasonable terms.
The growth of our business may depend in part on our ability to acquire or in-license additional proprietary rights.
For example, our programs may involve product candidates or equipment that may require the use of additional
proprietary rights held by third parties. Our product candidates may also require specific formulations to work effectively
and efficiently. These formulations may be covered by intellectual property rights held by others. We may develop
products containing our compositions and pre-existing pharmaceutical compositions. These pharmaceutical products may
be covered by intellectual property rights held by others. We may be required by the FDA, MHRA, EMA or other foreign
regulatory authorities to provide a companion diagnostic test or tests with our product candidates. These diagnostic test or
tests may be covered by intellectual property rights held by others. We may be unable to acquire or in-license any relevant
third-party intellectual property rights that we identify as necessary or important to our business operations. We may fail
to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all, which would harm our business. We
may need to cease use of the compositions or methods covered by such third-party intellectual property rights, and may
need to seek to develop alternative approaches that do not infringe on such intellectual property rights which may entail
additional costs and development delays, even if we were able to develop such alternatives, which may not be feasible.
Even if we are able to obtain a license under such intellectual property rights, any such license may be non-exclusive,
which may allow our competitors access to the same technologies licensed to us.
Risks Related to Employee Matters and Managing Growth
We may need to expand our organization, and we may experience difficulties in managing this growth, which
could disrupt our operations.
As of December 31, 2022, we had 358 employees. We expect to continue to expand our organization, including
hiring and training employees and managerial personnel to staff our expanding manufacturing and supply chain
operations in our new facilities in Ireland. We may have difficulty identifying, hiring and integrating new personnel.
Future growth would impose significant additional responsibilities on our management, including the need to identify,
recruit, maintain, motivate and integrate additional employees, consultants and contractors. Also, our management may
need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial
amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our
operations, which may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business
opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could
require significant capital expenditures and may divert financial resources from other projects, such as the development
of product candidates. If our management is unable to effectively manage our growth, our expenses may increase more
than expected, our ability to generate and/or grow revenues could be reduced, and we may not be able to implement our
business strategy. Our future financial performance and our ability to commercialize our product candidates and compete
effectively will depend, in part, on our ability to effectively manage any future growth. Our expected growth could
require significant capital expenditures and may divert financial resources from other projects, such as the development
of additional product candidates. If our management is unable to effectively manage our expected growth, our expenses
may increase more than expected, our potential ability to generate revenue could be reduced and we may not be able to
implement our business strategy. Many of the biotechnology companies that we compete against for qualified personnel
and consultants have greater financial and other resources, different risk profiles and a longer history in the industry than
we do. If we are unable to continue to attract and retain high-quality personnel and consultants, the rate and success at
which we can discover and develop product candidates and operate our business will be limited.
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Our future success depends on our ability to retain our key personnel and to attract, retain and motivate
qualified personnel.
Our industry has experienced a high rate of turnover of management personnel in recent years. We are highly
dependent on the development, regulatory, commercialization and business development expertise of Alexandria Forbes,
Ph.D., our President and Chief Executive Officer, Rich Giroux, our Chief Operating Officer and Chief Financial Officer
and Stuart Naylor, Ph.D., our Chief Development Officer, as well as the other principal members of our management,
scientific and clinical teams. Although we have formal employment agreements with certain of our executive officers,
these agreements do not prevent them from terminating their employment with us at any time and, for certain of our
executive officers, entitle them to receive severance payments in connection with their voluntary resignation of
employment.
If we lose one or more of our executive officers or key employees, our ability to implement our business strategy
successfully could be seriously harmed. Furthermore, replacing executive officers and key employees may be difficult
and may take an extended period of time because of the limited number of individuals in our industry with the breadth of
skills and experience required to develop, gain regulatory approval of and commercialize product candidates successfully.
Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these
additional key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology
companies for similar personnel. In addition, we rely on consultants and advisors, including scientific and clinical
advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and
advisors may be engaged by entities other than us and may have commitments under consulting or advisory contracts
with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality
personnel, our ability to develop and commercialize product candidates will be limited.
Potential product liability lawsuits against us could cause us to incur substantial liabilities and limit
commercialization of any products that we may develop.
The use of our product candidates in clinical trials and the sale of any products for which we obtain marketing
approval exposes us to the risk of product liability claims. Product liability claims might be brought against us by
consumers, health care providers, pharmaceutical companies or others selling or otherwise coming into contact with our
products. On occasion, large judgments have been awarded in class action lawsuits based on products that had
unanticipated adverse effects. If we cannot successfully defend against product liability claims, we could incur substantial
liability and costs. In addition, regardless of merit or eventual outcome, product liability claims may result in:
● impairment of our business reputation and significant negative media attention;
● withdrawal of participants from our clinical trials;
● significant time, costs and diversion of management resources to defend the related litigation;
● substantial monetary awards to patients or other claimants;
● inability to commercialize our product candidates;
● product recalls, withdrawals or labeling, marketing or promotional restrictions;
● decreased demand for our product candidates, if approved for commercial sale; and
● loss of revenue.
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Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed
to significant uninsured liabilities.
We do not carry insurance for all categories of risk that our business may encounter. Some of the policies we
currently maintain include general liability, clinical trial liability, employment practices liability, property, auto, workers’
compensation, umbrella, cyber and directors’ and officers’ insurance. Any additional product liability insurance coverage
we acquire in the future, may not be sufficient to reimburse us for any expenses or losses we may suffer. Moreover,
insurance coverage is becoming increasingly expensive and restrictive, and in the future we may not be able to maintain
insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If we obtain
marketing approval for our product candidates, we intend to acquire insurance coverage to include the sale of commercial
products; however, we may be unable to obtain product liability insurance on commercially reasonable terms or in
adequate amounts. A successful product liability claim or series of claims brought against us could cause our share price
to decline and, if judgments exceed our insurance coverage, could adversely affect our results of operations and business,
including preventing or limiting the commercialization of any product candidates we develop. We do not carry specific
biological or hazardous waste insurance coverage, and our property, casualty and general liability insurance policies
specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or
contamination. Accordingly, in the event of contamination or injury, we could be held liable for damages or be penalized
with fines in an amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended.
Operating as a public company may make it more difficult and more expensive for us to obtain director and officer
liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher
costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified
people to serve on our board of directors, our board committees or as executive officers. If we are unable to maintain
existing insurance with adequate levels of coverage, any significant uninsured liability may require us to pay substantial
amounts, which would adversely affect our cash position and results of operations.
Our employees and independent contractors, including consultants, vendors, and any third parties we may engage in
connection with development and commercialization may engage in misconduct or other improper activities,
including noncompliance with regulatory standards and requirements, which could harm our business.
Misconduct by our employees and independent contractors, including consultants, vendors, and any third parties
we may engage in connection with development and commercialization, could include intentional, reckless or negligent
conduct or unauthorized activities that violate: (i) applicable laws and regulations of the FDA, MHRA, EMA and other
regulatory or governmental authorities, including those laws that require the reporting of true, complete and accurate
information to such authorities; (ii) manufacturing standards; (iii) data privacy, security, fraud and abuse and other
healthcare laws and regulations; or (iv) laws that require the reporting of true, complete and accurate financial
information and data. Specifically, sales, marketing and business arrangements in the healthcare industry are subject to
extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales
commission, customer incentive programs and other business arrangements. Activities subject to these laws could also
involve the improper use or misrepresentation of information obtained in the course of clinical trials, creation of
fraudulent data in preclinical studies or clinical trials or illegal misappropriation of drug product, which could result in
regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct
by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective
in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other
actions or lawsuits stemming from a failure to comply with such laws or regulations. Additionally, we are subject to the
risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions
are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have
a significant impact on our business and results of operations, including the imposition of significant civil, criminal and
administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare,
Medicaid, other U.S. federal healthcare programs or healthcare programs in other jurisdictions, integrity oversight and
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reporting obligations to resolve allegations of non-compliance, individual imprisonment, other sanctions, contractual
damages, reputational harm, diminished profits and future earnings, and curtailment of our operations.
Our business and operations may suffer in the event of system failures and our systems and those of our business
partners and service providers may be vulnerable to cybersecurity risks.
Our information technology systems, including manufacturing systems, as well as those of our business partners
and service providers, are vulnerable to damage from computer viruses, unauthorized access, hardware and software
failures, natural disasters, terrorism, war and telecommunication and electrical failures. If such an event were to occur, it
could result in a material disruption of our product candidate development programs or manufacturing operations. For
example, the loss of preclinical study or clinical trial data from completed, ongoing or planned trials could result in delays
in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. A significant
interruption to our manufacturing operations could delay the completion of clinical trials and increase the costs of those
trials. To the extent that any disruption or security breach were to result in a loss of or damage to our data or applications,
or inappropriate disclosure of personal, confidential or proprietary information, we could incur liability and the further
development of our product candidates could be delayed.
In the ordinary course of our business, we, our business partners and our service providers collect, process and
store sensitive data, including intellectual property, clinical trial data, proprietary business information, personal data and
personally identifiable information of our clinical trial subjects and employees. The secure processing, maintenance and
transmission of this information is critical to our operations. Increased cybersecurity threats pose a risk to this
information, in addition to our and our business partners’ and service providers’ systems and networks. Attacks upon
information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and
are being conducted by sophisticated and organized groups, governments and individuals with a wide range of motives
and expertise. We may also face increased cybersecurity risks due to our reliance on internet technology and the number
of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit
vulnerabilities. Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change
frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or
implement adequate preventative measures. We may also experience security breaches that may remain undetected for an
extended period. Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to
attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to
remove or obfuscate forensic evidence.
Despite our security measures, our information technology and infrastructure may be vulnerable to cyber-attacks
by hackers or internal bad actors, or breached due to employee error, a technical vulnerability, malfeasance or other
disruptions that could have a negative impact, including loss or destruction of data (including confidential or critical
business information). Although, to our knowledge, we have not experienced any such material security breach to date,
we may experience cybersecurity incidents such as malware infections, ransomware, phishing attempts, thefts of
personal, confidential, proprietary or other critical business information and other attempts at compromising our
information technology that are typical for a company of our size in our market. Any security breach could compromise
our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access,
disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the
privacy of personal information, significant regulatory penalties, and such an event could disrupt our operations, damage
our reputation, result in significant expenses in implementing future security measures and cause a loss of confidence in
us and our ability to conduct clinical trials, which could adversely affect our reputation and financial results, and delay
clinical development of our product candidates.
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The UK’s withdrawal from the EU has resulted in changes to regulatory requirements and has had and may continue
to have a negative effect on global economic conditions, financial markets and our business, which could reduce the
price of our shares.
Following a national referendum and enactment of legislation by the government of the UK, the UK formally
withdrew from the EU on January 31, 2020, commonly referred to as “Brexit”. Since the end of the Brexit transition
period on January 1, 2021, Great Britain (England, Scotland and Wales) has not been directly subject to EU laws,
however under the terms of the Protocol on Ireland and Northern Ireland, EU laws have generally applied to Northern
Ireland. On February 27, 2023, the UK Government and the European Commission reached a political agreement on the
“Windsor Agreement” which may revise the Protocol on Ireland and Northern Ireland in order to address some of the
perceived shortcomings in its operation. Under the proposed changes, Northern Ireland would be reintegrated under the
regulatory authority of the MHRA with respect to medicinal products. These proposed changes need to be codified and
agreed by the respective parliaments of the UK and EU before taking effect. There could be additional uncertainty and
risk around what these changes will mean to our business.
More generally, it is currently unclear to what extent the UK Government will seek to align its regulations with the
EU. The EU laws that have been transposed into UK law through secondary legislation remain applicable in Great
Britain. However, under the Retained EU Law (Revocation and Reform) Bill 2022, which is currently before the UK
parliament, any retained EU law not expressly preserved and “assimilated” into domestic law or extended by ministerial
regulations (to no later than June 23, 2026) will automatically expire and be revoked by December 31, 2023. In addition,
new legislation such as the CTR is not applicable in Great Britain. Whilst the EU-UK Trade and Cooperation Agreement,
or TCA, includes the mutual recognition of Good Manufacturing Practice, or GMP inspections of manufacturing facilities
for medicinal products and GMP documents issued, it does not contain wholesale mutual recognition of UK and EU
pharmaceutical regulations and product standards. There may be divergent local requirements in Great Britain from the
EU in the future, which may impact clinical and development activities that occur in the UK in the future. Similarly,
clinical trial submissions in the UK will not be able to be bundled with those of EU member states within the EMA
Clinical Trial Information System, or CTIS, adding further complexity, cost and potential risk to future clinical and
development activity in the UK. Significant political and economic uncertainty remains about how much the relationship
between the UK and EU will differ as a result of the UK’s withdrawal.
These developments, or the perception that any related developments could occur, have had and may continue to
have a material adverse effect on global economic conditions and the stability of global financial markets, and may
significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain
financial markets. Any of these factors could depress economic activity and restrict our access to capital, which could
have a material adverse effect on our business, financial condition and results of operations and reduce the price of our
ordinary shares.
Companies established in Great Britain cannot use the centralized procedure and instead must follow one of the
UK national authorization procedures or one of the remaining post-Brexit international cooperation procedures (such as
the Access Consortium) to obtain an MA to market products in Great Britain. The MHRA may rely on a decision taken
by the European Commission on the approval of a new (centralized procedure) MA when determining an application for
a Great Britain MA; or use the MHRA’s decentralized or mutual recognition procedures which enable MAs approved in
EU member states (or Iceland, Liechtenstein, Norway) to be granted in Great Britain. Additionally, the ‘Unfettered
Access Procedure’ enables an MA holder in Northern Ireland to seek recognition in Great Britain.
The full impact of these new arrangements and requirements, both on our existing processes and our ability to
adjust our business and operations to operate successfully in the UK and EU, as well as more broadly on UK-EU cross-
border trade and the economy, are expected to become clearer in the coming years. In particular, it remains to be seen
whether the initial implementation of, and adjustment of UK-EU trading processes for, the TCA could disrupt or
otherwise negatively impact our business and operations. These negative impacts could include amongst others a decrease
in foreign direct investment in the UK, an increase of our costs, disruption of our supply chains, restrictions on
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our ability to access capital and depression on economic activity or economic instability, which could in turn lead to a
reduction in asset valuations, currency exchange rates and credit ratings.
In addition, the TCA has imposed additional restrictions on the free movement of people between the UK and the
EU, which could have a material adverse effect on us, since we compete in these jurisdictions for well qualified
employees in all aspects of our business. Any impact on our ability to attract new employees and to retain existing
employees in their current jurisdictions could decrease our competitiveness. Any of these factors could have an adverse
effect on our business, financial condition, results of operations, and prospects.
Risks Related to Our Ordinary Shares
The market price of our ordinary shares may be volatile and fluctuate substantially, which could result in
substantial losses for purchasers of our ordinary shares.
Our share price is likely to be volatile. The stock market in general and the market for smaller biopharmaceutical
companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of
particular companies. As a result of this volatility, you may not be able to sell your ordinary shares at or above your
purchase price. The market price for our ordinary shares may be influenced by many factors, including:
● the success of competitive products or technologies;
● actual or expected changes in our growth rate relative to our competitors;
● results of clinical trials of our product candidates or those of our competitors;
● developments related to our existing or any future collaborations;
● regulatory or legal developments in the United States and other countries;
● development of new product candidates that may address our markets and make our product candidates
less attractive;
● changes in physician, hospital or healthcare provider practices that may make our product candidates
less useful;
● announcements by us, our partners or our competitors of significant acquisitions, strategic partnerships,
joint ventures, collaborations or capital commitments;
● developments or disputes concerning patent applications, issued patents or other proprietary rights;
● the recruitment or departure of key personnel;
● the level of expenses related to any of our product candidates or clinical development programs;
● failure to meet or exceed financial estimates and projections of the investment community or that we
provide to the public;
● the results of our efforts to discover, develop, acquire or in-license additional product candidates or
products;
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● actual or expected changes in estimates as to financial results, development timelines, recommendations
by securities analysts or shifting investor perceptions;
● variations in our financial results or those of companies that are perceived to be similar to us;
● changes in the structure of healthcare payment systems;
● market conditions in the pharmaceutical and biotechnology sectors;
● general economic, industry and market conditions;
● changes in accounting principles; and
● the other factors described in this “Item 1A. Risk Factors” section and elsewhere in this Form 10-K.
In addition, the stock market in general, and Nasdaq and biopharmaceutical companies in particular, have experienced
extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of
these companies. In the past, when the market price of a security has been volatile, holders of that security have
sometimes instituted securities class action litigation against the issuer. This risk is especially relevant for us because
biopharmaceutical companies have experienced significant stock price volatility in recent years and during the COVID-19
pandemic. If any of the holders of our ordinary shares were to bring such a lawsuit against us, we could incur substantial
costs defending the lawsuit and the attention of our senior management would be diverted from the operation of our
business. Any adverse determination in litigation could also subject us to significant liabilities. Broad market and industry
factors may negatively affect the market price of our ordinary shares, as well as general economic, political and market
conditions such as recessions, interest rate changes or international currency fluctuations, regardless of our actual
operating performance. Further, a decline in the financial markets and related factors beyond our control may cause the
price of our ordinary shares to decline rapidly and unexpectedly. If the market price of our ordinary shares does not exceed
your purchase price, you may not realize any return on your investment in us and may lose some or all of your investment.
Our executive officers, directors and principal shareholders, if they choose to act together, have the ability
to significantly influence all matters submitted to shareholders for approval.
As of December 31, 2022, our executive officers, directors and shareholders who owned more than 5% of our
outstanding ordinary shares and their respective affiliates, in the aggregate, hold ordinary shares representing
approximately 40.0% of our outstanding ordinary shares. In addition, in connection with entering into the Financing
Agreement, we issued to an affiliate of Perceptive Advisors, LLC, our largest shareholder that employs a director serving
on our board, warrants to purchase an aggregate of 700,000 of our ordinary shares.
As a result, if these shareholders choose to act together, they would be able to significantly influence all matters
submitted to our shareholders for approval, as well as our management and affairs. For example, these persons, if they
choose to act together, would significantly influence the election of directors, the composition of our management and
approval of any merger, consolidation, sale of all or substantially all of our assets or other business combination that other
shareholders may desire. Any of these actions could adversely affect the market price of our ordinary shares.
We are an “emerging growth company” and a “smaller reporting company,” and the reduced disclosure
requirements applicable to emerging growth companies and smaller reporting companies may make our ordinary
shares less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS
Act”), and may remain an emerging growth company until the last day of the fiscal year December 31, 2023, which
represents the fifth year anniversary of our IPO. However, if certain events occur prior to the end of such five-year period,
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including if we become a “large accelerated filer,” our annual gross revenues exceed $1.07 billion or we issue more than
$1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to
the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to
rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not
emerging growth companies. These exemptions include:
● reduced disclosure obligations relating to the presentation of financial statements in the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” disclosure in our periodic
reports filed with the SEC;
● not being required to comply with the auditor attestation requirements in the assessment of our internal
control over financial reporting;
● not being required to comply with any requirement that may be adopted by the Public Company
Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s
report providing additional information about the audit and the financial statements;
● reduced disclosure obligations regarding executive compensation; and
● exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and shareholder approval of any golden parachute payments not previously approved.
In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended
transition period for complying with new or revised accounting standards. This allows an emerging growth company to
delay the adoption of these accounting standards until they would otherwise apply to private companies. We have elected
to take advantage of this extended transition period.
We are also a smaller reporting company, and we will remain a smaller reporting company until the fiscal year
following the determination that our voting and non-voting ordinary shares held by non-affiliates is more than $250
million measured on the last business day of our second fiscal quarter, or our annual revenues are more than $100 million
during the most recently completed fiscal year and our voting and non-voting ordinary shares held by non-affiliates is
more than $700 million measured on the last business day of our second fiscal quarter. Similar to emerging growth
companies, smaller reporting companies are able to provide simplified executive compensation disclosure, are exempt
from the auditor attestation requirements of Section 404, and have certain other reduced disclosure obligations, including,
among other things, not being required to provide selected financial data, supplemental financial information or risk
factors.
We may choose to take advantage of some, but not all, of the available exemptions for emerging growth
companies and smaller reporting companies. We cannot predict whether investors will find our ordinary shares less
attractive if we rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may
be a less active trading market for our ordinary shares and our share price may be more volatile.
Anti-takeover provisions in our organizational documents and Cayman Islands law may discourage or prevent a
change of control, even if an acquisition would be beneficial to our shareholders, which could depress the price of our
ordinary shares and prevent attempts by our shareholders to replace or remove our current management.
Our memorandum and articles of association contain provisions that may discourage unsolicited takeover
proposals that shareholders may consider to be in their best interests. Our board of directors is divided into three classes
with staggered, three-year terms. Our board of directors has the ability to designate the terms of and issue preferred shares
without shareholder approval. We are also subject to certain provisions under Cayman Islands law that could delay or
prevent a change of control. Together these provisions may make more difficult the removal of management and may
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discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our
ordinary shares.
There may be difficulties in enforcing foreign judgments against our management or us.
Certain of our directors and management reside outside the United States. A significant portion of our assets and
such persons’ assets are located outside the United States. As a result, it may be difficult or impossible for investors to
effect service of process upon us within the United States or other jurisdictions, including judgments predicated upon the
civil liability provisions of the federal securities laws of the United States.
In particular, investors should be aware that there is uncertainty as to whether the courts of the Cayman Islands or
any other applicable jurisdictions would recognize and enforce judgments of U.S. courts obtained against us or our
directors or management predicated upon the civil liability provisions of the securities laws of the United States or any
state in the United States or entertain original actions brought in the Cayman Islands or any other applicable jurisdiction’s
courts against us or our directors or officers predicated upon the securities laws of the United States or any state in the
United States.
The rights of our shareholders differ from the rights typically offered to shareholders of a U.S. corporation.
Our corporate affairs and the rights of holders of ordinary shares are governed by Cayman Islands law, including
the provisions of the Cayman Islands Companies Act (as amended), or the Companies Act, the common law of the
Cayman Islands and by our memorandum and articles of association. We are also subject to the federal securities laws of
the United States. The rights of shareholders to take action against the directors, actions by minority shareholders and the
fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common
law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial
precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive
authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary
responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or
judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of
securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed
and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to
initiate a shareholders derivative action in a Federal court of the United States.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face
of actions taken by management, members of the board of directors or controlling shareholders than they would as public
shareholders of a United States company.
We expect to be treated as resident in the UK for tax purposes, but may be treated as a dual resident company for UK
tax purposes.
Our board of directors conducts our affairs so that the central management and control of the company is exercised
in the UK. As a result, we expect to be treated as resident in the UK for UK tax purposes. Accordingly, we expect to be
subject to UK taxation on our income and gains, except where an exemption applies.
However, we may be treated as a dual resident company for UK tax purposes. As a result, our right to claim
certain reliefs from UK tax may be restricted, and changes in law or practice in the UK could result in the imposition of
further restrictions on our right to claim UK tax reliefs.
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We may be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes,
which could result in adverse U.S. federal income tax consequences to U.S. investors in our ordinary shares.
Based on the current and anticipated value of our assets, including goodwill, and the current and anticipated
composition of our income, assets and operations, we do not believe we were a PFIC for the taxable year ended on
December 31, 2022, and do not expect to be a PFIC for the current taxable year. However, the application of the PFIC
rules is subject to uncertainty in several respects, and we cannot assure you that the U.S. Internal Revenue Service, or the
IRS, will not take a contrary position. Furthermore, a separate determination must be made after the close of each taxable
year as to whether we are a PFIC for that year. Accordingly, we cannot assure you that we were not a PFIC for our
taxable year ended on December 31, 2022 or that we will not be a PFIC for our current taxable year or any future taxable
year. A non-U.S. company will be considered a PFIC for any taxable year if (i) at least 75% of its gross income is passive
income (including interest income), or (ii) at least 50% of the value of its assets (based on an average of the quarterly
values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive
income. The value of our assets generally is determined by reference to the market price of our ordinary shares, which
may fluctuate considerably. In addition, the composition of our income and assets is affected by how, and how quickly,
we spend any cash we raise. If we were to be classified as a PFIC for any taxable year during which a U.S. holder holds
our ordinary shares, certain materially adverse U.S. federal income tax consequences could apply to such U.S. holder.
If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to
adverse U.S. federal income tax consequences.
If a U.S. holder of our ordinary shares is treated as owning (directly, indirectly or constructively) at least 10% of
the value or voting power of our ordinary shares, such U.S. holder may be treated as a “United States shareholder” with
respect to each “controlled foreign corporation” in our group (if any). If our group includes one or more U.S. subsidiaries,
certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations (regardless of whether we are
treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation may be
required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global
intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, regardless of whether
we make any distributions. An individual that is a United States shareholder with respect to a controlled foreign
corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United
States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject you to
significant monetary penalties and may prevent the statute of limitations from starting with respect to your U.S. federal
income tax return for the year for which reporting was due. We cannot provide any assurances that we will assist
investors in determining whether any of our non-U.S. subsidiaries is treated as a controlled foreign corporation or whether
such investor is treated as a United States shareholder with respect to any of such controlled foreign corporations. Further,
we cannot provide any assurances that we will furnish to any United States shareholders information that may be
necessary to comply with the aforementioned reporting and tax payment obligations. U.S. holders of our ordinary shares
should consult their tax advisors regarding the potential application of these rules to their investment in our ordinary
shares.
Changes in tax laws or challenges to our tax position could adversely affect our results of operations and
financial condition.
We are subject to complex tax laws that are subject to change or differing interpretations, including on a
retroactive basis. Any such changes in tax laws, regulations and treaties, or the interpretation thereof, tax policy initiatives
and reforms under consideration and the practices of tax authorities in jurisdictions in which we operate could adversely
affect our tax position, including our effective tax rate or tax payments.
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We have significant U.S. federal and state net operating losses, or NOLs, and UK carryforward tax losses which we
may not be able to realize or which may be restricted under applicable law. We also benefit from certain tax incentive
regimes, such as research and development tax credits. Any adverse change to these regimes, the application thereof
or challenges to the tax position we have adopted under these rules could adversely affect our results of operations
and financial condition.
As of December 31, 2022, we had federal and state NOL carryforwards in the United States of $63.8 million and
$64.4 million, respectively, and cumulative carryforward tax losses in the UK of $187.9 million, which we expect to be
available to reduce future taxable income subject to any relevant restrictions (including those in the U.S. and UK that
limit the percentage of taxable income that can be reduced by NOLs and carried forward losses). The U.S. federal and
state NOLs incurred prior to January 1, 2018 in the amount of approximately $1.0 million and $0.8 million, respectively,
will begin to expire in 2036. U.S. federal NOLs generated after December 31, 2017 are not subject to expiration but such
NOLs may only offset 80% of taxable income for taxable years beginning after December 31, 2020. As of December 31,
2022, we also had orphan drug and research and development credits in the U.S. in the amount of $9.4 million and
research and development credits in the UK of $2.4 million. The UK carryforward tax losses will continue indefinitely,
subject to relevant restrictions, under current UK legislation.
The NOLs and carryforward tax losses are subject to review and possible adjustment by the applicable tax
authorities. Additionally, NOLs and UK carryforward tax losses, and research and development tax credits, may become
subject to limitations in the event of certain cumulative changes in the ownership interest of significant shareholders, as
determined under Sections 382 of the United States Internal Revenue Code, as well as the Corporation Tax Act 2010 Part
14 under the UK tax rules. This could limit the amount of NOLs or carryforward tax losses that we can utilize annually to
offset future taxable income or tax liabilities. We have conducted a review of changes in the ownership interest of
significant shareholders and determined that as of December 31, 2021, there were no limitations in the UK. However, for
U.S. federal tax purposes, we have determined that ownership changes occurred in August 2016 and June 2018. We are
still in the process of determining the annual limitation on NOLs as a result of such ownership changes. Subsequent
ownership changes and changes to the U.S. federal or state or UK tax rules in respect of the utilization of NOLs and
carryforward tax losses may further affect the limitation in future years.
General Risk Factors
We may engage in acquisitions that could disrupt our business, cause dilution to our shareholders or reduce our
financial resources.
We have, and may in the future, enter into transactions to acquire other businesses, products or technologies. If
we do identify suitable candidates, we may not be able to make such acquisitions on favorable terms, or at all. Any
acquisitions we make may not strengthen our competitive position, and these transactions may be viewed negatively by
customers or investors. We may decide to incur debt in connection with an acquisition or issue our ordinary shares or
other equity securities to the shareholders of the acquired company, which would reduce the percentage ownership of our
existing shareholders. We could incur losses resulting from undiscovered liabilities of the acquired business that are not
covered by the indemnification we may obtain from the seller. In addition, we may not be able to successfully integrate
the acquired personnel, technologies and operations into our existing business in an effective, timely and nondisruptive
manner. Acquisitions may also divert management attention from day-to-day responsibilities, increase our expenses and
reduce our cash available for operations and other uses. We cannot predict the number, timing or size of future
acquisitions or the effect that any such transactions might have on our operating results.
Exchange rate fluctuations may adversely affect our results of operations and financial condition.
Owing to the international scope of our operations, fluctuations in exchange rates may adversely affect us,
particularly between the U.S. dollar on the one hand, and the pound sterling and euro on the other hand. As a result, our
business and the market price of our securities may be affected by such fluctuations, which may have a significant impact
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on our results of operations and cash flows from period to period. Currently, we do not have any exchange rate hedging
arrangements in place.
Our management team has broad discretion as to the use of the net proceeds from public and private equity or debt
financings and the investment of these proceeds may not yield a favorable return. We may invest the proceeds in ways
with which our shareholders disagree.
We have broad discretion in the application of any net proceeds we have received in the past or may receive in
the future pursuant to existing or future equity and debt financings. Shareholders may not agree with our decisions, and
our use of the proceeds and our existing cash and cash equivalents may not improve our results of operation or enhance
the value of our ordinary shares. Our ability to apply certain proceeds may be restricted. For example, the proceeds
provided under our Note Purchase Agreement may be used for working capital and general corporate purposes. Our
failure to apply any such funds effectively could have a material adverse effect on our business, delay the development of
our product candidates and cause the market price of our ordinary shares to decline. In addition, until the net proceeds are
used, they may be placed in investments that do not produce significant income or that may lose value. Additionally, our
existing cash and cash equivalents are subject to general credit, liquidity, market and interest rate risks, which have been
and may, in the future, be exacerbated by a U.S. and/or global financial crises. We may realize losses in the fair value of
certain of our investments or a complete loss of these investments if the credit markets tighten, which would have an
adverse effect on our results of operations, liquidity and financial condition.
We incur substantial costs as a result of operating as a public company, and our management is required to devote
substantial time to new compliance initiatives and corporate governance practices.
As a public company, and particularly if we no longer qualify as an emerging growth company and smaller
reporting company in the future, we incur and will continue to incur significant legal, accounting and other expenses that
we did not incur as a private company. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and
Consumer Protection Act, The Nasdaq Global Select listing requirements and other applicable securities rules and
regulations impose various requirements on public companies, including establishment and maintenance of effective
disclosure and financial controls and corporate governance practices. Our management and other personnel need to
devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our
legal and financial compliance costs.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we are required to furnish a report by
our management on our internal control over financial reporting. However, while we remain an emerging growth
company, we will not be required to include an attestation report on internal control over financial reporting issued by our
independent registered public accounting firm. To achieve compliance with Section 404, we engage in a process to
document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard,
we will need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan
to assess and document the adequacy of internal control over financial reporting, continue steps to improve control
processes as appropriate, validate through testing whether such controls are functioning as documented, and implement a
continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a
risk that we, or our independent registered public accounting firm if we no longer qualify as an emerging growth
company, will not be able to conclude that our internal control over financial reporting is effective as required by Section
404. In addition, any testing by us conducted in connection with Section 404, or any subsequent testing by our
independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting
that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial
statements or identify other areas for further attention or improvement. If we identify one or more material weaknesses or
determine we have inadequate internal controls, it could result in an adverse reaction in the financial markets due to a loss
of confidence in the reliability of our financial statements.
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If securities or industry analysts cease to publish research or reports about our business, or if they issue an adverse or
misleading opinion regarding our ordinary shares, our share price and trading volume could decline.
The trading market for our ordinary shares relies in part on the research and reports that industry or securities
analysts publish about us or our business. We do not control these analysts. Furthermore, if any of the analysts who cover
us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our share
performance, or if any of our preclinical studies or clinical trials and operating results fail to meet the expectations of
analysts, our share price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish
reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or
trading volume to decline.
Expectations relating to environmental, social and governance factors may impose additional costs and expose us to
new risks.
There is an increasing focus from the SEC, stock exchanges, certain investors and other stakeholders concerning
corporate responsibility, specifically related to environmental, social and governance factors. The SEC is considering and
in some cases has proposed rules regarding new disclosure requirements relating to environmental, social and governance
factors, and the SEC approved in 2021 new Nasdaq listing and disclosure requirements relating to board diversity that are
applicable to us. Some investors may use these factors to guide their investment strategies and, in some cases, may
choose not to invest in us if they believe our policies and disclosures relating to corporate responsibility are inadequate.
Third-party providers of corporate responsibility ratings and reports on companies have varied and in some cases
inconsistent standards. In addition, the criteria by which companies’ corporate responsibility practices are assessed are
evolving, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new
criteria. Alternatively, if we elect not to or are unable to satisfy such new criteria or do not meet the criteria of a specific
third-party provider, some investors may conclude that our policies with respect to corporate responsibility are
insufficient. We may face reputational damage in the event that our corporate responsibility procedures or standards do
not meet the standards set by various constituencies. Furthermore, if our competitors’ corporate responsibility
performance is perceived to be greater than ours, potential or current investors may elect to invest with our competitors
instead. In addition, in the event that we communicate or disclose certain initiatives and goals regarding environmental,
social and governance matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we
could be criticized for the scope of such initiatives or goals or be subject to litigation for such failures. If we fail to satisfy
the expectations of investors and other stakeholders or our initiatives are not executed as planned, our reputation and
financial results could be adversely affected.
Because we do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future, capital
appreciation, if any, would be your sole source of gain.
Under Cayman Islands law, we may only make distributions by way of dividend out of profits, or out of our share
premium account (provided that immediately following the date that the dividend is proposed to be paid we are able to
pay our debts as they fall due in the ordinary course of business). We have never declared or paid any cash dividends on
our ordinary shares. We currently anticipate that we will retain future earnings for the development, operation and
expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In
addition, the Note Purchase Agreement prohibits us from paying dividends during its term and the terms of existing and
future financing agreements may also preclude us from paying dividends. As a result, capital appreciation, if any, of our
ordinary shares would be your sole source of gain on an investment in our ordinary shares for the foreseeable future. See
the “Dividend Policy” section of this Form 10-K for the year ended December 31, 2022 for additional information.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.
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ITEM 2.
PROPERTIES
Our principal office is located at 450 East 29th Street, New York, New York, USA, where we lease 22,721 square
feet of office and laboratory space. We lease this office space under a lease that terminates on October 31, 2026.
We also own a long leasehold interest in the ground rights where our 29,000 square foot manufacturing facility is
located, at 92 Britannia Walk, London, United Kingdom. The long leasehold interest expires in 2126, and there is no
facility rent due.
Additionally, we lease an 11,306 square foot office facility located at 34-38 Provost Street, London, United
Kingdom and 6,679 square feet of laboratory facilities at 15 Ebenezer Street, London, United Kingdom. The office space
lease terminates on September 8, 2029 and the laboratory leases terminate on May 24, 2027. We also lease 10,126 square
feet of office, laboratory and storage facilities at Paalbergweg 2-4, Amsterdam, Netherlands. The lease terminates on
March 30, 2031.
In January 2021, we completed the acquisition of the buildings for our second, large scale cGMP viral vector
manufacturing facility and our first cGMP plasmid and DNA production facility located in Buildings 2 and 3, Block K,
Airport Avenue, Shannon Free Zone, Shannon, Ireland. The campus encompasses an aggregate of 150,000 square feet. We
also entered into a lease for each property providing for a long leasehold interest that expires in 2211.
ITEM 3.
LEGAL PROCEEDINGS
We are not subject to any material legal proceedings.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5.
AND ISSUER PURCHASES OF EQUITY SECURITIES
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
Market Information
Our ordinary shares trade on the Nasdaq Global Select Market under the symbol “MGTX.”
Holders of Record
As of March 8, 2023, there were 55 holders of record. The actual number of shareholders of our ordinary shares
is greater than this number of record holders and includes shareholders who are beneficial owners but whose ordinary
shares are held in street name by brokers and other nominees. This number of holders of record also does not include
shareholders whose ordinary shares may be held in trust by other entities.
Dividend Policy
We have never declared or paid any cash dividends on our ordinary shares. We intend to retain future earnings, if
any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. In addition, the Note Purchase Agreement prohibits us from paying dividends during its term and the
terms of existing and future financing agreements may also preclude us from paying dividends. However, if we do pay a
cash dividend on our ordinary shares in the future, we will only pay such dividend out of our profits or share premium
(subject to solvency requirements) as permitted under Cayman Islands law.
Recent Sales of Unregistered Securities
On November 9, 2022, we entered into a securities purchase agreement with Johnson and Johnson Innovation –
JJDC, Inc., the investment arm of Johnson and Johnson (“JJDC”), pursuant to which we, in a private placement, agreed to
issue and sell to JJDC an aggregate of 3,742,514 ordinary shares at a purchase price of $6.68 per share for gross proceeds
of approximately $25.0 million.
The ordinary shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the
Securities Act of 1933, as amended.
ITEM 6.
RESERVED
ITEM 7.
RESULTS OF OPERATIONS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
You should read the following discussion and analysis of financial condition and operating results together with
our financial statements and the related notes appearing in this Form 10-K. Some of the information contained in this
discussion and analysis or set forth elsewhere in this Form 10-K, including information with respect to our plans and
strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.
As a result of many important factors, including those set forth in the section of this Form 10-K captioned “Item 1A. Risk
Factors” and elsewhere in this Form 10-K, our actual results could differ materially from the results described in, or
implied by, the forward-looking statements contained in the following discussion and analysis. For convenience of
presentation some of the numbers have been rounded in the text below.
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Overview
We are a vertically integrated, clinical stage gene therapy company with six programs in clinical development and
a broad pipeline of preclinical and research programs. We have core capabilities in viral vector design and optimization and
gene therapy manufacturing, as well as a potentially transformative gene regulation platform technology that allows
precise, dose responsive control of gene expression by oral small molecules with dynamic range that can exceed 5000-fold.
Led by an experienced management team, we have taken a portfolio approach by licensing, acquiring and developing
technologies that give us depth across both product candidates and indications. Our initial focus is on three distinct areas of
unmet medical need: ocular diseases, including both inherited retinal diseases as well as large degenerative ocular diseases,
neurodegenerative diseases, and severe forms of xerostomia. Though initially focusing on the eye, central nervous system
and salivary gland, we intend to expand our focus in the future to develop additional gene therapy treatments for patients
suffering from a range of serious diseases.
We are an exempted company incorporated under the laws of the Cayman Islands in 2018, and prior to that, we
commenced operations as MeiraGTx Limited, a private limited company incorporated under the laws of England and
Wales in 2015. Our discussion of our financial condition and results of operations is based upon our financial statements,
which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).
Since our formation, we have devoted substantially all of our resources to developing our technology platform, establishing
our viral vector manufacturing facilities and our cGMP plasmid and DNA production facility and developing
manufacturing processes, advancing the product candidates in our ophthalmology, salivary gland and neurodegenerative
disease programs, building our intellectual property portfolio, organizing and staffing our company, developing our
business plan, raising capital, and providing general and administrative support for these operations. To date, we have
financed our operations primarily with cash on hand and proceeds from the sales of our Series A ordinary shares,
Convertible Preferred C Shares and ordinary shares. Through December 31, 2022, we received gross proceeds of
approximately $471.0 million from sales of our ordinary shares, Series A ordinary shares and convertible preferred C
shares, gross proceeds of approximately $75.0 million from issuance of debt and $130.0 million from the collaboration,
option and license agreement with Janssen Pharmaceuticals, Inc. (“Janssen”), one of the Janssen Pharmaceuticals
Companies of Johnson & Johnson (the “Collaboration Agreement”). As of December 31, 2022, we had cash and cash
equivalents of $115.5 million, as well as $21.3 million we expect to receive from Janssen in the first quarter of 2023 in
connection with the Collaboration Agreement.
We are a clinical stage company and have not generated any product revenues to date. We have six clinical
programs and a pipeline of preclinical programs. Since inception, we have incurred significant operating losses. Our net
losses for the years ended December 31, 2022 and 2021 were $129.6 million and $79.6 million, respectively. As of
December 31, 2022, we had an accumulated deficit of $470.2 million. We do not expect to generate revenue from sales of
products for several years, if at all. Under the Collaboration Agreement, we received an upfront payment in the amount of
$100.0 million in March 2019 and a milestone payment in the amount of $30.0 million in December 2021. Additionally,
pursuant to the Collaboration Agreement, we are eligible to receive research and development funding and additional
potential milestone payments and royalties.
Our total operating expenses were $132.3 million and $110.5 million for the years ended December 31, 2022 and
2021, respectively. While we expect our operating expenses to continue to increase in connection with our ongoing
development activities related to our product candidates, including the ongoing Phase 3 Lumeos clinical trial of
botaretigene sparoparvovec for the treatment of patients with XLRP, we believe that certain of these increases will be
partially offset by the research funding in connection with the Collaboration Agreement. In addition, we expect to continue
incurring increasing costs associated with our clinical activities for AAV-hAQP1 for the treatment of radiation-induced
xerostomia and xerostomia associated with Sjogren’s syndrome, as well as for AAV-GAD for the treatment of Parkinson’s
disease. We also incurred expenses during the year ended December 31, 2022 and expect to continue to incur expenses
related to research activities in additional therapeutic areas to expand our pipeline, developing our potentially
transformative gene regulation technology, hiring additional personnel as needed in manufacturing, research, clinical
operations, quality and other functional areas, and associated cash and share-based compensation expense, as
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well as the further development of internal manufacturing capabilities and capacity and other associated costs including the
management of our intellectual property portfolio.
On August 2, 2022 we, as borrower, and the Subsidiary Guarantors, entered into the Financing Agreement by and
among the Company, the Subsidiary Guarantors, the lenders and other parties from time to time party thereto and
Perceptive, as administrative agent and lender. On December 19, 2022, the Financing Agreement was converted to a Note
Purchase Agreement between the same parties and under substantially the same terms and conditions as the Financing
Agreement, subject to certain customary note constitution terms.
The Note Purchase Agreement provides for the issuance of the Tranche 1 Notes in an initial amount of $75.0
million, and we may request the issuance of the Tranche 2 Notes in an additional amount of $25.0 million to be made
available at Perceptive’s sole discretion before August 2, 2024. The Note Purchase Agreement matures on August 2, 2026
and is interest-only during the term. We have the option to redeem outstanding principal notes at any time along with an
applicable early redemption fee. Outstanding amounts under the Note Purchase Agreement bear interest at a fluctuating
rate per annum equal to 10.00% plus the secured overnight financing rate administered by the Federal Reserve Bank of
New York for a one-month tenor, subject to a 1.00% floor.
On November 9, 2022, we entered into a securities purchase agreement with JJDC, pursuant to which we, in a
private placement, agreed to issue and sell to JJDC an aggregate of 3,742,514 ordinary shares at a purchase price of $6.68
per share for gross proceeds of approximately $25.0 million.
We will require additional capital in the future, which we may raise through equity offerings, debt financings,
marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or other
sources to enable us to complete the development and potential commercialization of our product candidates. Furthermore,
we expect to continue incurring costs associated with being a public company. Adequate additional financing may not be
available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative effect
on our financial condition and our ability to pursue our business strategy. In addition, attempting to secure additional
financing may divert the time and attention of our management from day-to-day activities and harm our product candidate
development efforts. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay,
reduce or eliminate certain of our research and development programs.
Based on our cash and cash equivalents at December 31, 2022 and the research funding and milestone payments
we expect to receive under the Collaboration Agreement, we estimate that such funds will be sufficient to enable us to fund
our operating expenses and capital expenditure requirements through the fourth quarter of 2024. We have based these
estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we
currently expect. See “Liquidity and Capital Resources.” Because of the numerous risks and uncertainties associated with
the development of our product candidates, any future product candidates, our platform and technology and because the
extent to which we may enter into collaborations with third parties for development of any of our product candidates is
unknown, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with
completing the research and development of our product candidates.
Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise
additional capital through the sale of equity or convertible securities, your ownership interest will be diluted, and the terms
of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Any
future debt financing or preferred equity or other financing, if available, may involve agreements that include covenants
limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or
declaring dividends and may require the issuance of warrants, which could potentially dilute your ownership interests.
If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or
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product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds
through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product
development programs or any future commercialization efforts or grant rights to develop and market product candidates
that we would otherwise prefer to develop and market ourselves.
Because of the numerous risks and uncertainties associated with drug development, we are unable to predict the
timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are
able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to
sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be
forced to reduce or terminate our operations.
Highlights and Recent Developments
Recent Development Highlights and Anticipated 2023 Milestones
Botaretigene Sparoparvovec for the Treatment of XLRP:
● On October 1, 2022, clinical data from a Phase 1/2 MGT009 clinical trial (NCT03252847) were presented in a
late-breaking oral presentation at the Retina Subspecialty Day program of the AAO 2022 Annual Meeting;
treatment with botaretigene sparoparvovec was found to have an acceptable safety profile and efficacy
assessments in this study and demonstrated improvements in retinal sensitivity, visual function and functional
vision.1
● Further sensitivity analysis was conducted on study participants by applying the Phase 3 Lumeos
(NCT04671433) study eligibility criteria that corroborated the endpoints selected for the Phase 3 study.1
● We, in collaboration with Janssen, are dosing patients in the pivotal Phase 3 Lumeos clinical trial of botaretigene
sparoparvovec and remain on track for a BLA submission in 2024.
1 Michaelides, M et al. Ph1/2 AAV5-RPGR (Botaretigene Sparoparvovec) Gene Therapy Trial in RPGR-associated X-
linked Retinitis Pigmentosa (XLRP). Abstract #30071754. Presented at the 2022 American Academy of Ophthalmology
Annual Meeting.
AAV-hAQP1 for the Treatment of Grade 2/3 Radiation-Induced Xerostomia:
● We reported positive clinical data from the AQUAx Phase 1 clinical trial in December 2022.
o Clinically meaningful improvements in xerostomia symptoms and disease burden in two validated
Patient-Reported Outcome (PRO) measures in both unilateral and bilateral treated cohorts were
demonstrated.
◾ 18/24, or 75% achieved clinically meaningful symptom improvement using the Global Rate of
Change (GRCQ) PRO.
◾ Using the Xerostomia Questionnaire (XQ), 71% (17/24) reported an improvement of >8 points
(clinically meaningful), and 67% (16/24) had an improvement of ≥10 (considered
transformative by KOLs).
o Meaningful increases in whole saliva flow rates were observed post-treatment, providing objective
evidence of the biological activity of AAV-hAQP1 treatment.
o Early long-term follow-up data suggest durability of improvement 2+ years post-treatment.
o AAV-hAQP1 appears safe and well-tolerated at each dose tested.
● All participants are followed for 1 year post-treatment and then enter a long-term follow-up study for another 4
years.
● We intend to present the final 12 month data from the bilateral treated cohorts from the AQUAx Phase 1 study in
the second quarter of 2023.
● Based on the favorable safety and efficacy profile of AAV-hAQP1 in the AQUAx Phase 1 study, we intend to
initiate a randomized, double-blind, placebo-controlled, Phase 2 study evaluating the bilateral administration of
two active doses of AAV-hAQP1 in the second quarter of 2023.
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AAV-GAD for the Treatment of Parkinson’s Disease:
● We are now dosing patients in the AAV-GAD clinical trial under a new IND using material manufactured in our
cGMP facility in London, United Kingdom using our proprietary production process.
● The AAV-GAD trial is a three-arm randomized Phase 1 clinical bridging study with subjects randomized to one of
two doses of AAV-GAD or sham control.
● The objective of the AAV-GAD trial (NCT05603312) is to evaluate the safety and tolerability of AAV-mediated
delivery of glutamic acid decarboxylase (GAD) gene transfer into the subthalamic nuclei (STN) of participants
with Parkinson's disease.
● Completion of enrollment is anticipated by the third quarter of 2023.
Riboswitch Gene Regulation Platform & Vector Engineering:
● We exhibited 15 poster presentations at the European Society of Gene and Cell Therapy 2022 Annual Congress,
which included data from our novel gene regulation platform, including the first data demonstrating the potential
to regulate cell therapies including CAR-T, as well as data from our promoter platforms and several new,
optimized pre-clinical programs addressing severe unmet needs for indications such as amyotrophic lateral
sclerosis (ALS) and Wilson’s disease. In addition, we made several presentations on our proprietary viral vector
manufacturing technology and potency assay development.
● Our next-generation riboswitch-based gene regulation platform can be used to precisely control the expression of
any gene delivered in any context with an unprecedented dynamic range using novel, synthetic, orally delivered
small molecules.
● We now have over 30 novel orally available small molecules with high specificity and potency to our riboswitch
aptamers moving through PK, biodistribution and toxicology studies, with the first GMP material for IND
currently being manufactured.
Gene Therapy Manufacturing:
● Our wholly-owned facilities have now produced GMP clinical trial material for 6 different indications, using
multiple AAV serotypes, including administration into the eye, salivary gland and central nervous system.
● We believe that our proprietary platform production process has produced one of the highest yields and full ratios
in the industry.
● We believe that bringing all aspects of testing and vector production in-house reduces regulatory risk, ensures the
highest quality of products, lowers costs and helps avoid bottlenecks in clinical development.
● In addition to our 30,000-square-foot facility in London, we now have a 150,000-square-foot plant in Shannon,
Ireland which contains three facilities: one built to be flexible and scalable for viral vector production, another to
manufacture plasmid DNA – the critical starting material for producing gene therapy products – and third, a
Quality Control (QC) hub performing advanced biochemical quality control testing appropriate for
commercialization.
Components of Our Results of Operations
License Revenue
Our license revenue consisted of the amortization of the upfront and milestone payments we received in
connection with the Collaboration Agreement.
Operating Expenses
Our operating expenses since inception have consisted primarily of general and administrative costs and research
and development costs.
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General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including share-based
compensation, for personnel in our executive, finance, legal, business development and administrative functions. General
and administrative expenses also include legal fees relating to intellectual property and corporate matters; professional fees
for accounting, auditing, tax and consulting services; insurance costs; travel expenses; and office facility-related expenses,
which include direct depreciation costs.
We expect that our general and administrative expenses will increase in the future as we increase our personnel
headcount to support increased research and development activities. We have also incurred and expect to continue to incur
increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax-
related services associated with maintaining compliance with Nasdaq and SEC requirements; director and officer insurance
costs; and investor and public relations costs.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our
discovery efforts, and the development of our product candidates, and include:
● employee-related expenses, including salaries, benefits and travel of our research and development
personnel;
● expenses incurred in connection with third-party vendors that conduct clinical and preclinical studies and
manufacture the drug product for the clinical trials and preclinical activities;
● acquisition of in process research and development;
● costs associated with clinical and preclinical activities including costs related to facilities, supplies, rent,
insurance, certain legal fees, share-based compensation, and depreciation; and
● expenses incurred with the development and operation of our manufacturing facilities.
We expense research and development costs as incurred.
Research and development activities are central to our business model. We expect that our research and
development expenses will continue to increase substantially for the foreseeable future as we initiate additional preclinical
and clinical trials of our existing product candidates, including the ongoing Phase 3 Lumeos trial of botaretigene
sparoparvovec for the treatment of patients with XLRP, and continue to discover and develop additional product
candidates. Certain of these increases in research and development costs will be partially offset by the research funding
provided in connection with the Collaboration Agreement we entered into in January 2019. In addition, we expect to
continue incurring increasing research and development costs associated with our clinical activities for AAV-hAQP1 for
the treatment of radiation-induced xerostomia and xerostomia associated with Sjogren’s syndrome, as well as for AAV-
GAD for the treatment of Parkinson’s disease.
We cannot determine with certainty the duration and costs of future clinical trials of our product candidates or any
other product candidate we may develop or if, when, or to what extent we will generate revenue from the
commercialization and sale of any product candidate for which we obtain marketing approval. We may never succeed in
obtaining marketing approval for any product candidate. The duration, costs and timing of clinical trials and development
of our existing product candidates or any other product candidate we may develop will depend on a variety of factors,
including:
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● the scope, rate of progress, expense and results of clinical trials of our existing product candidates, as well as
of any future clinical trials of other product candidates and other research and development activities that we
may conduct;
● uncertainties in clinical trial design and patient enrollment rates;
● the actual probability of success for our product candidates, including the safety and efficacy, early clinical
data, competition, manufacturing capability and commercial viability;
● significant and changing government regulation and regulatory guidance;
● the timing and receipt of any marketing approvals; and
● the expense of filing, prosecuting, defending and enforcing any patent claims and other intellectual property
rights.
A change in the outcome of any of these variables with respect to the development of a product candidate could
mean a significant change in the costs and timing associated with the development of that product candidate. For example,
if the FDA or another U.S. or foreign regulatory authority were to require us to conduct clinical trials beyond those that we
anticipate will be required for the completion of clinical development of a product candidate, or if we experience
significant delays in our clinical trials due to patient enrollment or other reasons, we would be required to expend
significant additional financial resources and time on the completion of clinical development.
Other non-operating income (expense)
Other non-operating income (expense) includes the following:
Foreign currency (loss) gain
Our consolidated financial statements are presented in U.S. dollars, which is our reporting currency. The financial
position and results of operations of our subsidiaries MeiraGTx UK II Limited, MeiraGTx Ireland DAC, MeiraGTx
Netherlands B.V., MeiraGTx B.V. and MeiraGTx Belgium are measured using the foreign subsidiaries’ local currency as
the functional currency. These entities’ cash accounts holding U.S. dollars and intercompany payables and receivables are
remeasured based upon the exchange rate at the date of remeasurement with the resulting gain or loss included in the
consolidated statement of operations and comprehensive loss.
Other comprehensive income
Other comprehensive income includes the following:
Foreign currency translation gain
Expenses of subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the
period. Assets and liabilities have been translated at the rates of exchange on the consolidated balance sheet date. The
resulting translation gain adjustments are recorded directly as a separate component of shareholders’ equity and as other
comprehensive loss on the consolidated statements of operations and comprehensive loss.
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Critical Accounting Policies and Use of Estimates
Management’s discussion and analysis of our financial condition and results of operations is based on our
consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these
consolidated financial statements requires us to make estimates and judgements that affect the reporting amounts of assets,
liabilities and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. On
an ongoing basis, we evaluate our estimates and judgements, including those related to license and collaboration revenue,
share-based compensation and accrued expenses. We base our estimates on historical experience, known trends and events
and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for
making judgements about the carrying value of assets and liabilities that are not readily apparent from our sources. Actual
results may differ from these estimates under different assumptions.
While our significant accounting policies are described in more detail in the notes to our financial statements
appearing in this Form 10-K, we believe that the following accounting policies are those most critical to the judgments and
estimates used in the preparation of our financial statements.
Collaboration Arrangements
We evaluate our collaborative arrangements pursuant to Accounting Standards Codification (“ASC”) 808,
Collaborative Arrangements (“ASC 808”) and ASC 606, Revenue from Contracts with Customers (“ASC 606”). We
consider the nature and contractual terms of collaborative arrangements and assess whether the arrangement involves a
joint operating activity pursuant to which we are an active participant and are exposed to significant risks and rewards with
respect to the arrangement. If we are an active participant and exposed to significant risks and rewards with respect to the
arrangement, we account for the arrangement as a collaboration under ASC 808. To date, we have entered into two separate
collaboration agreements, both of which are with Janssen, which were determined to be within the scope of ASC 808.
ASC 808 does not address recognition or measurement matters related to collaborative arrangements. Payments
between participants pursuant to a collaborative arrangement that are within the scope of other authoritative accounting
literature on income statement classification are accounted for using the relevant provisions of that literature. If the
payments are not within the scope of other authoritative accounting literature, the income statement classification for the
payments is based on an analogy to authoritative accounting literature or if there is no appropriate analogy, a reasonable,
rational and consistently applied accounting policy election. Payments received from a collaboration partner to which this
policy applies may include upfront payments in respect of a license of intellectual property, development and
commercialization-based milestones, and royalties.
Revenue Recognition
Arrangements with collaborators may include licenses to intellectual property, research and development services,
manufacturing services for clinical and commercial supply, and participation on joint steering committees. We evaluate the
promised goods or services to determine which promises, or group of promises, represent performance obligations. In
contemplation of whether a promised good or service meets the criteria required of a performance obligation, we consider
the stage of development of the underlying intellectual property, the capabilities and expertise of the customer relative to
the underlying intellectual property, and whether the promised goods or services are integral to or dependent on other
promises in the contract. When accounting for an arrangement that contains multiple performance obligations, we must
develop judgmental assumptions, which may include market conditions, reimbursement rates for personnel costs,
development timelines and probabilities of regulatory success to determine the stand-alone selling price for each
performance obligation identified in the contract.
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When we conclude that a contract should be accounted for as a combined performance obligation and recognized
over time, we must then determine the period over which revenue should be recognized and the method by which to
measure revenue. We generally recognize revenue using a cost-based input method.
The Collaboration Agreement is accounted for under ASC 808, however, as ASC 808 does not address
recognition or measurement matters such as determining the appropriate unit of accounting or when the recognition criteria
are met, we account for the consideration received from Janssen in accordance with ASC 606. In accordance with ASC
606, we recognize revenue when the customer or collaborator obtains control of promised goods or services, in an amount
that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue
recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps:
i.
identify the contract(s) with a customer;
ii.
identify the performance obligations in the contract;
iii. determine the transaction price;
iv. allocate the transaction price to the performance obligations within the contract; and
v.
recognize revenue when (or as) the entity satisfies a performance obligation.
We only apply the five-step model to contracts when we determine that it is probable we will collect the
consideration we are entitled to in exchange for the goods or services we transfer to the customer.
At contract inception, once the contract is determined to be by analogy within the scope of ASC 606, we assess
the goods or services promised within the contract to determine whether each promised good or service is a performance
obligation. The promised goods or services for our arrangements typically consist of a license to our intellectual property
and research, development and manufacturing services. We may provide options to additional items in such arrangements,
which are accounted for as separate contracts when the customer elects to exercise such options, unless the option provides
a material right to the customer. Performance obligations are promises in a contract to transfer a distinct good or service to
the customer that (i) the customer can benefit from on its own or together with other readily available resources, and (ii) is
separately identifiable from other promises in the contract. Goods or services that are not individually distinct performance
obligations are combined with other promised goods or services until such combined group of promises meet the
requirements of a performance obligation.
We determine transaction prices based on the amount of consideration we expect to receive for transferring the
promised goods or services in the contract. Consideration may be fixed, variable, or a combination of both. At contract
inception for arrangements that include variable consideration, we estimate the probability and extent of consideration we
expect to receive under the contract utilizing either the most likely amount method or expected amount method, whichever
best estimates the amount expected to be received. We then consider any constraints on the variable consideration and
include in the transaction price variable consideration to the extent it is deemed probable that a significant reversal in the
amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is
subsequently resolved.
We then allocate the transaction price to each performance obligation based on the relative standalone selling price
and recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation
when (or as) control is transferred to the customer and the performance obligation is satisfied. For performance obligations
which consist of licenses and other promises, we utilize judgment to assess the nature of the combined performance
obligation to determine whether the combined performance obligation is satisfied over time or at
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a point in time and, if over time, the appropriate method of measuring progress. We evaluate the measure of progress each
reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
We record amounts as accounts receivable when the right to consideration is deemed unconditional. When
consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or
services to the customer under the terms of a contract, a contract liability is recorded as deferred revenue.
Amounts received prior to satisfying the revenue recognition criteria are recognized as deferred revenue in our
consolidated balance sheet. Amounts expected to be recognized as revenue within the 12 months following the balance
sheet date are classified as deferred revenue – related party, current. Amounts not expected to be recognized as revenue
within the 12 months following the balance sheet date are classified as deferred revenue – related party.
Income Taxes
Since we have recurring losses and a valuation allowance against deferred tax assets, there was no tax expense
(benefit) for the years ended December 31, 2022 and 2021.
Research and Development
Research and development costs are charged to expense as incurred. These costs include, but are not limited to,
employee-related expenses, including salaries, benefits and travel of our research and development personnel; expenses
incurred under agreements with contract research organizations and investigative sites that conduct clinical and preclinical
studies and manufacture the drug product for the clinical studies and preclinical activities; acquisition of in-process
research and development; facilities; supplies; rent, insurance, certain legal fees, stock-based compensation, depreciation
and other costs associated with clinical and preclinical activities and regulatory operations. Research funding under
collaboration agreements and refundable research and development credits / tax credits received are recorded as an offset to
these costs.
Costs for certain development activities, such as outside research programs funded by us, are recognized based on
an evaluation of the progress to completion of specific tasks with respect to their actual costs incurred. Payments for these
activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and
are reflected in the financial statements as prepaid or accrued research and development expense, as the case may be.
Share-Based Compensation
Options
We grant share options to employees, non-employee members of our board of directors and non-employee
consultants as compensation for services performed. Employee and non-employee members of the board of directors’
awards of share-based compensation are accounted for in accordance with ASC 718, Compensation—Stock Compensation,
or ASC 718. ASC 718 requires all share-based payments to employees and non-employee directors, including grants of
share options, to be recognized in the statement of operations and comprehensive loss based on their grant date fair values.
The grant date fair value of share options is estimated using the Black-Scholes option valuation model.
Using this model, fair value is calculated based on assumptions with respect to (i) the fair value of our ordinary
shares on the grant date; (ii) expected volatility of our ordinary share price, (iii) the periods of time over which employees
and members of our board of directors are expected to hold their options prior to exercise (expected term), (iv) expected
dividend yield on our ordinary shares, and (v) risk-free interest rates.
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Our ordinary shares were not traded on a public exchange prior to our IPO in June 2018. Therefore, we believe
that our future volatility will differ materially during the expected term from the volatility that would be calculated from
our historical share prices to date. Consequently, expected volatility is based on an analysis of guideline companies in
accordance with ASC 718. The expected dividend yield is zero as we have never paid dividends and do not currently
anticipate paying any in the foreseeable future. Risk-free interest rates are based on quoted U.S. Treasury rates for
securities with maturities approximating the option’s expected term.
Restricted Share Units
The Company grants restricted share units (“RSUs”) to employees, non-employee members of our board of
directors and non-employee consultants as compensation for services performed. Awards of RSUs are accounted for in
accordance with ASC 718, Compensation - Stock Compensation, or ASC 718. ASC 718 requires all share-based payments
to employees and non-employee directors, including grants of RSUs, to be recognized in the consolidated statement of
operations and comprehensive loss based on their grant date fair values. The grant date fair value of RSUs is determined
using the closing market price of the Company’s ordinary shares on the date of grant.
Results of Operations
Comparison of the Years Ended December 31, 2022 and 2021
License revenue - related party
Operating expenses:
General and administrative
Research and development
Total operating expenses
Loss from operations
Other non-operating income (expense)
Foreign currency loss
Interest income
Interest expense
Fair value adjustments
Net loss
Other comprehensive income:
Foreign currency translation gain
Comprehensive loss
License Revenue
2022
$
15,920
2021
(in thousands)
37,701
$
Change
$
(21,781)
46,550
85,725
132,275
(116,355)
(9,452)
777
(4,946)
361
(129,615)
43,765
66,694
110,459
(72,758)
(6,293)
212
(288)
(434)
(79,561)
2,785
19,031
21,816
(43,597)
(3,159)
565
(4,658)
795
(50,054)
8,718
$ (120,897) $
2,226
(77,335) $
6,492
(43,562)
License revenue was $15.9 million for the year ended December 31, 2022, compared to $37.7 million for the year
ended December 31, 2021. This decrease is a result of the Company receiving a $30.0 million milestone payment in
connection with the Collaboration Agreement during the year ended December 31, 2021.
General and Administrative Expenses
General and administrative expenses were $46.6 million for the year ended December 31, 2022, compared to
$43.8 million for the year ended December 31, 2021. The increase of $2.8 million was primarily due to an increase of $3.4
million in share-based compensation, $2.0 million in legal and accounting fees, $1.3 million in consulting fees and $0.4
million in depreciation. These increases were partially offset by a decrease of $1.7 million in payroll and payroll-
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related costs, $1.2 million in insurance, $0.8 million in rent and facilities costs and $0.6 million in other general and
administrative costs.
Research and Development Expenses
Research and development expenses for the years ended December 31, 2022 and 2021 were as follows (in
millions):
Gross research and development expenses
Janssen reimbursements
Tax incentive reimbursement
Research and development expenses
2022
165.8 $
(73.3)
(6.8)
85.7
$
2021
141.1 $
(69.0)
(5.4)
66.7
$
$
$
Change
24.7
(4.3)
(1.4)
19.0
Gross research and development expenses for the year ended December 31, 2022 increased $24.7 million as
compared to the prior year primarily due to an increase of $8.9 million in costs related to the manufacturing of our clinical
trial materials, $6.5 million in payroll and payroll-related costs, $4.6 million in costs related to our pre-clinical research and
clinical trials, $4.5 million in share-based compensation, $2.7 million in rent and facility costs, $0.5 million in depreciation
and $1.1 million in other research costs. These increases were partially offset by a decrease of $2.6 million in license fees
and $1.5 million in acquired research and development costs.
Reimbursements under the Collaboration Agreement for the year ended December 31, 2022 increased $4.3
million as compared to the prior year primarily due to an increase in activity in the programs licensed under the
Collaboration Agreement.
Tax incentive reimbursement for the year ended December 31, 2022 increased $1.4 million as compared to the
prior year primarily due to the increase in allowable research and development costs.
Foreign Currency Loss
Foreign currency loss was $9.5 million for the year ended December 31, 2022 compared to a loss of $6.3 million
for the year ended December 31, 2021. The increase in the loss of $3.2 million was primarily due to an unrealized loss on
the valuation of the Company’s intercompany payables and receivables due to the strengthening of the U.S. dollar against
the pound sterling and euro during the year ended December 31, 2022.
Interest Income
Interest income was $0.8 million for the year ended December 31, 2022 compared to $0.2 million for the year
ended December 31, 2021. The increase was due to a higher interest rate during 2022.
Interest Expense
Interest expense was $4.9 million for the year ended December 31, 2022 compared to $0.3 million for the year
ended December 31, 2021. The increase was primarily due to the interest on the Financing Agreement entered into in
August 2022, which was later converted to a Note Purchase Agreement in December 2022.
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Other Comprehensive Income – Foreign Currency Translation Gain
Foreign currency translation adjustments resulted in a translation gain of $8.7 million for the year ended
December 31, 2022 compared to a translation gain of $2.2 million for the year ended December 31, 2021. The change in
the amount of $6.5 million was primarily due to a strengthening of the U.S. dollar against the pound sterling and euro
during the year ended December 31, 2022.
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. For the year ended December 31, 2022, we
used $73.1 million in cash flows from operations. We did not generate positive cash flows from operations during the year
and there are no assurances that we will generate positive cash flows in the future. Additionally, there are no assurances
that we will be successful in obtaining an adequate level of financing for the development and commercialization of our
product candidates. We expect to incur significant expenses and operating losses for the foreseeable future as we advance
the preclinical and clinical development of our product candidates. We expect that our research and development and
general and administrative costs will increase in connection with conducting preclinical studies and clinical trials for our
product candidates, building out internal capacity to have products manufactured to support preclinical studies and clinical
trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations. In
addition, on August 4, 2020 we entered into agreements to acquire the buildings for our second, large scale cGMP viral
vector manufacturing facility and our first cGMP plasmid and DNA production facility in Shannon, Ireland to expand our
manufacturing and supply chain capabilities. We closed on the acquisition of the first building in August 2020 and closed
on the second building in January 2021. As a result of these incurred and expected expenses we will need additional capital
to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing
arrangements, or other sources.
We do not currently have any approved products and have never generated any revenue from product sales. We
have historically financed our operations primarily through cash on hand and proceeds from the sale of our ordinary shares,
series A ordinary shares and convertible preferred C shares. In March 2019 and December 2021, we received a
$100.0 million upfront payment and a $30.0 million milestone payment, respectively, in connection with the Collaboration
Agreement, which also provides us with research funding, and we are eligible to receive additional potential milestone
payments and royalties.
Additionally, on August 2, 2022, we, as borrower, and our Subsidiary Guarantors, entered into a Financing
Agreement by and among us, the Subsidiary Guarantors, the lenders and other parties from time to time party thereto and
Perceptive, as administrative agent and lender. On December 19, 2022, the Financing Agreement was converted to a Note
Purchase Agreement between the same parties and under substantially the same terms and conditions as the Financing
Agreement, subject to certain customary note constitution terms.
The Note Purchase Agreement provides for the issuance of the Tranche 1 Notes in an initial amount of $75.0
million, and we may request the issuance of the Tranche 2 Notes in an additional amount of $25.0 million to be made
available at Perceptive’s sole discretion before August 2, 2024. The Note Purchase Agreement matures on August 2, 2026
and is interest-only during the term. We have the option to redeem outstanding principal notes at any time along with an
applicable early redemption fee. Outstanding amounts under the Note Purchase Agreement bear interest at a fluctuating
rate per annum equal to 10.00% plus the secured overnight financing rate administered by the Federal Reserve Bank of
New York for a one-month tenor, subject to a 1.00% floor.
Our obligations under the Note Purchase Agreement are secured by our London, UK and Shannon, Ireland
manufacturing facilities, $3.0 million of our cash and the bank accounts of the Subsidiary Guarantors, and the issued and
outstanding equity interests of the Subsidiary Guarantors.
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The Note Purchase Agreement imposes covenants that include, among other things, enrolling in a Phase III trial
for AAV-RPGR on or before June 30, 2023, and ensuring the Company’s Shannon manufacturing facility meets or satisfies
all applicable good manufacturing practice requirements on or before December 31, 2023, as well as various restrictions on
us and the Subsidiary Guarantors, including restrictions pertaining to: (i) the incurrence of additional indebtedness, (ii)
limitations on liens, (iii) limitations on certain investments, (iv) making distributions, dividends and other payments, (v)
mergers, consolidations and acquisitions, (vi) dispositions of assets, (vii) our maintenance of at least $3 million in a U.S.
bank account, (viii) transactions with affiliates, (ix) changes to governing documents, (x) changes to certain agreements
and leases and (xi) changes in control; however, certain of these restrictions contain exceptions which allow us to license,
sell and monetize assets in our AAV-hAQP1 program in development to treat radiation-induced xerostomia, our AAV-GAD
program in development to treat Parkinson’s disease and our gene regulation platform technologies.
In connection with entering into the Financing Agreement, we granted warrants (the “Warrants”) to Perceptive to
purchase up to (i) 400,000 ordinary shares of the Company at an exercise price of $15.00 per share and (ii) 300,000
ordinary shares of the Company at an exercise price of $20.00 per share. The Warrants will expire on August 2, 2027.
Based on our current cash, cash equivalents and accounts receivable – related party at December 31, 2022 and the
research funding and milestone payments we expect to receive under the Collaboration Agreement, we estimate that we
will be able to fund our operating expenses and capital expenditure requirements through the fourth quarter of 2024. We
have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources
sooner than we expect.
Cash Flows
We had $115.5 million and $137.7 million of cash and cash equivalents as of December 31, 2022 and 2021,
respectively.
The following table summarizes our sources and uses of cash for the period presented:
Net cash used in operating activities
Net cash used in investing activities
Net cash provided by financing activities
Net decrease in cash and cash equivalents
Operating Activities
For the Years Ended December 31,
2022
2021
(in thousands)
$
$
(73,098) $
(44,963)
95,200
(22,861)
$
(10,530)
(61,717)
1,708
(70,539)
During the year ended December 31, 2022, our cash used in operating activities of $73.1 million was primarily
due to our net loss of $129.6 million as we incurred expenses associated with research activities on our clinical programs,
manufacturing of our clinical trial materials, preclinical research programs and general and administrative expenses. The
net loss included non-cash charges of $46.9 million, which consisted of $28.6 million of share-based compensation, $9.5
million of a foreign currency loss, $8.7 million of depreciation and amortization, $0.4 million of a fair value downward
adjustment, $0.2 million of negative net change in right-of-use assets and liabilities, $0.2 million of amortization of interest
on asset retirement obligations and $0.4 million of amortization of the debt discount. Additionally, operating assets,
consisting of accounts receivable-related party, prepaid expenses, tax incentive receivable, other current assets and other
assets, decreased by $5.2 million and operating liabilities, consisting of accounts payable, accrued expenses, and deferred
revenue-related party, decreased by $4.4 million.
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During the year ended December 31, 2021, our cash used in operating activities of $10.5 million was primarily
due to our net loss of $79.6 million as we incurred expenses associated with research activities on our clinical programs,
manufacturing of our clinical trial materials, preclinical research programs and general and administrative expenses. The
net loss included non-cash charges of $37.8 million, which consisted of $20.8 million of share-based compensation, $6.3
million of a foreign currency loss, $7.9 million of depreciation and amortization, $1.0 million of shares issued in
connection with a license agreement, $1.0 million of shares issued in connection with an asset acquisition, $0.4 million of a
fair value adjustment, $0.2 million of net change in right-of-use assets and liabilities, $0.1 million of amortization of
interest on asset retirement obligations and $0.1 million of loss on disposal of equipment, furniture and fixtures.
Additionally, operating assets, consisting of accounts receivable-related party, prepaid expenses, tax incentive receivable,
other current assets and other assets, decreased by $17.3 million and operating liabilities, consisting of accounts payable,
accrued expenses, and deferred revenue-related party, increased by $14.0 million.
Investing Activities
Net cash used in investing activities for the year ended December 31, 2022 of $45.0 million consisted of
purchases of property and equipment for our manufacturing, laboratory and process development facilities and buildout
costs of our new facilities in Ireland.
Net cash used in investing activities for the year ended December 31, 2021 of $61.7 million consisted primarily of
$8.9 million in payments for the acquisition of the second building and long-term lease of our manufacturing facility in
Ireland, $6.5 million in connection with equity method and other investments and $46.3 million for purchases of property
and equipment for our manufacturing, laboratory and process development facilities and buildout costs of our new facilities
in Ireland.
Financing Activities
Net cash provided by financing activities was $95.2 million for the year ended December 31, 2022, which
consisted primarily of $75.0 million from issuance of the Tranche 1 Notes, $25.0 million from the issuance of ordinary
shares and $0.2 million in exercise of share options, which was offset by $2.8 million of payments for withholdings of
shares for income taxes, and financing fees of $2.2 million.
Net cash provided by financing activities was $1.7 million for the year ended December 31, 2021, which is
primarily from the exercise of share options.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements under applicable SEC rules and do not have any
holdings in variable interest entities.
Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), permits an “emerging growth company,”
which we are, to take advantage of an extended transition period to comply with new or revised accounting standards
applicable to public companies until those standards would otherwise apply to private companies. We have elected to take
advantage of this extended transition period through December 31, 2023.
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ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to market risks in the ordinary course of our business. These risks primarily include foreign
currency exchange rate sensitivities and interest rate risk.
Foreign Currency Exchange Risk
We currently operate in the United States, the United Kingdom, the Netherlands, Ireland and Belgium. Our
activities in these jurisdictions expose us to currency exchange rate fluctuations primarily between the U.S. Dollar and the
British pound sterling and euro. When the U.S. Dollar strengthens against these currencies, the U.S. Dollar value of non-
U.S. Dollar based losses increases. To the extent that our international activities recorded in local currencies increase in the
future, our exposure to fluctuations in currency exchange rates will correspondingly increase. With respect to our foreign
currency exposures as of December 31, 2022, we estimate a 10% unfavorable movement in foreign currency exchange
rates would have the effect of creating an additional foreign currency loss of approximately $28.1 million within other non-
operating income (expense) for the year ended December 31, 2022.
Interest Rate Risk
We are exposed to market risk as a result of changes in interest rates applicable to borrowings under our Note
Purchase Agreement. Borrowings under the Note Purchase Agreement bear interest at a fluctuating rate per annum equal to
10.00% plus the secured overnight financing rate (“SOFR”) administered by the Federal Reserve Bank of New York for a
one-month tenor, subject to a 1.00% floor. See Note 14 to our consolidated financial statements included elsewhere in this
Form 10-K. We may use interest rate cap derivatives, interest rate swaps or other interest rate hedging instruments to
economically hedge and manage interest rate risk with respect to our variable floating rate debt. As of December 31, 2022,
the annual interest rate was 13.02% and the outstanding balance of the Tranche 1 Notes was $75.0 million. Assuming no
change in the outstanding borrowings under the Note Purchase Agreement, we estimate that a hypothetical 1% increase in
the SOFR would increase our annual interest expense by approximately $0.8 million as of December 31, 2022.
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID 42)
Consolidated:
Balance Sheets
Statements of Operations and Comprehensive Loss
Statements of Shareholders' Equity
Statements of Cash Flows
Notes to Consolidated Financial Statements
F-1
F-2
F-3
F-4
F-5
F-6
F-7
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of MeiraGTx Holdings plc and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of MeiraGTx Holdings plc and Subsidiaries (the
“Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss,
shareholders' equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the
results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity
with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control
over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2016.
Jericho, New York
March 14, 2023
F-2
Table of Contents
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
December 31,
2022
December 31,
2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable - related party
Prepaid expenses
Tax incentive receivable
Other current assets
Total Current Assets
Property, plant and equipment, net
Intangible assets, net
In-process research and development
Other assets
Equity method and other investments
Right-of-use assets - operating leases, net
Right-of-use assets - finance leases, net
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued expenses
Lease obligations, current
Deferred revenue - related party, current
Other current liabilities
Total Current Liabilities
Deferred revenue - related party
Lease obligations
Asset retirement obligations
Deferred income tax liability
Note payable, net
Other long-term liabilities
TOTAL LIABILITIES
COMMITMENTS AND CONTINGENCIES (Note 15)
SHAREHOLDERS' EQUITY:
Ordinary Shares, $0.00003881 par value, 1,288,327,750
authorized, 48,477,209 and 44,548,925 shares issued and
outstanding at December 31, 2022 and 2021, respectively
Capital in excess of par value
Accumulated other comprehensive income (loss)
Accumulated deficit
Total Shareholders' Equity
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
$
$
$
115,516
21,334
8,133
7,689
1,667
154,339
109,266
1,335
742
1,402
6,326
20,109
24,718
318,237
16,616
39,818
3,884
15,123
6,631
82,072
27,436
17,331
2,179
186
71,033
262
200,499
2
581,893
6,047
(470,204)
117,738
318,237
$
$
$
$
137,703
22,384
8,102
12,634
2,420
183,243
75,860
1,791
783
1,404
6,656
22,782
27,645
320,164
15,348
27,586
3,374
21,820
—
68,128
43,046
20,359
2,081
196
—
953
134,763
2
528,659
(2,671)
(340,589)
185,401
320,164
See Notes to Consolidated Financial Statements
F-3
Table of Contents
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share and per share amounts)
For the Years Ended December 31,
2021
2022
License revenue - related party
$
15,920
$
37,701
Operating expenses:
General and administrative
Research and development
Total operating expenses
Loss from operations
Other non-operating income (expense):
Foreign currency loss
Interest income
Interest expense
Fair value adjustments
Net loss
Other comprehensive income:
Foreign currency translation gain
Comprehensive loss
Net loss
Basic and diluted net loss per ordinary share
Weighted-average number of ordinary shares outstanding
46,550
85,725
132,275
(116,355)
(9,452)
777
(4,946)
361
(129,615)
8,718
(120,897)
(129,615)
(2.87)
45,177,857
$
$
$
$
$
$
43,765
66,694
110,459
(72,758)
(6,293)
212
(288)
(434)
(79,561)
2,226
(77,335)
(79,561)
(1.80)
44,139,655
See Notes to Consolidated Financial Statements
F-4
Table of Contents
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(in thousands, except share amounts)
Ordinary
Shares
Amount
Capital in Excess
of Par Value
Accumulated Other
Comprehensive
Loss
Accumulated
Deficit
Total
Shareholders'
Equity
Balance at December 31, 2020
Share-based compensation activity
Issuance of shares in connection with equity method and other
investments
Issuance of shares in connection with asset acquisitions
Other comprehensive income
Net loss for the year ended December 31, 2021
Balance at January 1, 2022
Share-based compensation activity
Warrants issued in connection with note payable
Issuance of shares in connection with private placement, net of
issuance costs of $119
Other comprehensive income
Net loss for the period ended December 31, 2022
Balance at December 31, 2022
44,189,150
186,638
$
75,000
98,137
—
—
44,548,925
185,770
—
3,742,514
—
—
$
48,477,209
$
2
—
—
—
—
—
2
—
—
—
—
—
$
2
504,482
22,493
$
(4,897)
—
$ (261,028)
—
$
238,559
22,493
1,165
519
—
—
528,659
26,080
2,273
24,881
—
—
$
581,893
—
—
2,226
—
(2,671)
—
—
—
—
—
(79,561)
(340,589)
—
—
—
8,718
6,047
—
—
—
(129,615)
$ (470,204)
$
1,165
519
2,226
(79,561)
185,401
26,080
2,273
24,881
8,718
(129,615)
117,738
See Notes to Consolidated Financial Statements
F-5
Table of Contents
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense
Foreign currency loss
Depreciation and amortization
Net change in right-of-use assets and liabilities
(Gain) loss on disposal of equipment, furniture and fixtures
Loss on equity method investment
Amortization of interest on asset retirement obligations
Amortization of debt discount
Issuance of shares in connection with license agreement
Issuance of shares in connection with asset acquisition
Fair value adjustments
(Increase) decrease in operating assets:
Accounts receivable - related party
Prepaid expenses
Tax incentive receivable
Other current assets
Other assets
Increase (decrease) in operating liabilities:
Accounts payable
Accrued expenses
Other current liabilities
Deferred revenue - related party
Net cash used in operating activities
Cash flows from investing activities:
Purchase of property, plant and equipment
Payment for right-of-use asset
Equity method and other investments
Net cash used in investing activities
Cash flows from financing activities:
Exercise of share options
Payments of withholdings on shares withheld for income taxes
Payments on lease obligations - financing leases
Proceeds from the issuance of ordinary shares
Proceeds from issuance of note payable
Payment of financing fees
Net cash provided by financing activities
Net decrease in cash and cash equivalents
Effect of exchange rate changes on cash
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Supplemental disclosure of non-cash transactions:
Issuance of shares in connection with equity method and other investments
Fixed asset acquisition included in accounts payable and accrued expenses
Right-of-use assets obtained in exchange for lease liabilities
Asset retirement obligations incurred in connection with leases
Warrants issued in connection with note payable
Issuance of shares in connection with asset acquisition
Supplemental disclosure of cash flow information:
Cash paid for interest
$
$
$
$
$
$
$
$
See Notes to Consolidated Financial Statements
F-6
For the Years Ended December 31,
2021
2022
$
(129,615)
$
(79,561)
28,623
9,452
8,723
(153)
—
—
168
444
—
—
(361)
1,032
(329)
4,139
519
(173)
3,737
12,610
4,006
(15,920)
(73,098)
(44,963)
—
—
(44,963)
231
(2,774)
—
25,000
75,000
(2,257)
95,200
(22,861)
674
137,703
115,516
$
7,106
1,793
9
2,273
— $
$
$
$
$
— $
329
$
20,784
6,293
7,873
161
56
9
148
—
976
1,020
434
16,391
(1,083)
310
2,161
(457)
13,347
8,118
(23)
(7,487)
(10,530)
(46,351)
(8,866)
(6,500)
(61,717)
1,709
—
(1)
—
—
—
1,708
(70,539)
(1,278)
209,520
137,703
1,165
7,178
4,424
120
—
519
139
Table of Contents
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Principal Business Activity
The Company
MeiraGTx Holdings plc and subsidiaries (the “Company” or “Meira Holdings”), an exempted company incorporated
under the laws of the Cayman Islands, is a vertically integrated, clinical stage gene therapy company with six
programs in clinical development and a broad pipeline of preclinical and research programs. The Company has core
capabilities in viral vector design and optimization and gene therapy manufacturing, as well as a potentially
transformative gene regulation platform technology that allows precise, dose responsive control of gene expression by
oral small molecules with dynamic range that can exceed 5000-fold. Led by an experienced management team, the
Company has taken a portfolio approach by licensing, acquiring and developing technologies that give depth across
both product candidates and indications. The Company’s initial focus is on three distinct areas of unmet medical need:
ocular diseases, including inherited retinal diseases as well as large degenerative ocular diseases, neurodegenerative
diseases and severe forms of xerostomia. Though initially focusing on the eye, central nervous system and salivary
gland, the Company intends to expand its focus in the future to develop additional gene therapy treatments for patients
suffering from a range of serious diseases. The Company also owns and operates a current good manufacturing
practices, or cGMP, multi-product, multi-viral vector manufacturing facility in London, United Kingdom (“UK”),
which includes fill and finish capabilities and can supply the Company’s clinical and potential commercial material.
Additionally, the Company expanded its manufacturing and supply chain capabilities by acquiring a second, large
scale cGMP viral vector manufacturing facility and its first cGMP plasmid and DNA production facility in Shannon,
Ireland. The Company completed the acquisition of these facilities in January 2021.
Acquisition
On October 4, 2021, the Company acquired Bullseye Therapeutics, Inc. (“Bullseye”), a company engaged in
developing mechanisms to deliver retinal drugs and gene therapies to the eye. Bullseye was renamed MeiraGTx
Therapeutics, Inc.
This acquisition is part of the Company’s continuing efforts to expand its focus to develop additional gene therapy
treatments for patients suffering from a range of serious diseases. (See Note 3 for additional information).
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles
generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is
meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting
Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards
Board (“FASB”).
Liquidity
The Company has not yet achieved profitable operations. There is no assurance that profitable operations, if ever
achieved, could be sustained on a continuing basis. In addition, development activities, clinical and preclinical testing,
and commercialization of the Company’s product candidates will require significant additional financing. The
Company’s accumulated deficit at December 31, 2022 totaled $470.2 million, and management expects to incur
substantial losses in future periods. The success of the Company is subject to certain risks and uncertainties, including
among others, uncertainty of product development; competition in the Company’s field of use; uncertainty of capital
availability; uncertainty in the Company’s ability to enter into agreements with collaborative partners; expanding and
protecting the Company’s intellectual property portfolio; dependence on third parties; dependence on key personnel;
the COVID-19 pandemic and mitigation measures. For the year ended December 31, 2022, the Company used $73.1
million in cash flows from operations and there are no assurances that the Company will
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
generate positive cash flows in the future. Additionally, there are no assurances that the Company will be successful in
obtaining an adequate level of financing for the development and commercialization of its product candidates.
As of December 31, 2022, the Company had cash and cash equivalents in the amount of $115.5 million, which
consisted of depository and money market accounts held at large international banks. On January 30, 2019, the
Company entered into a collaboration, option and license agreement with Janssen Pharmaceuticals, Inc. (“Janssen”),
one of the Janssen Pharmaceuticals Companies of Johnson & Johnson (the “Collaboration Agreement”), for the
research, development and commercialization of gene therapies for the treatment of inherited retinal diseases (“IRD”).
Under the terms of the Collaboration Agreement, the Company received an upfront payment of $100.0 million in
March 2019 and a $30.0 million milestone payment in December 2021. The Company also receives funding for certain
research, manufacturing, clinical development and commercialization costs, potential additional milestone payments
upon the achievement of such milestones and royalties on future net sales of products. The Company estimates that its
cash and cash equivalents on hand and accounts receivable – related party at December 31, 2022 will be sufficient to
cover its expenses for at least the next twelve months from the date of issuance of these consolidated financial
statements.
Risks and Uncertainties
The Company operates in an industry that is subject to intense competition, government regulation and rapid
technological change. The Company’s operations are subject to significant risk and uncertainties including financial,
operational, technological, regulatory and other risks, including the potential risk of business failure.
There are also many uncertainties regarding the pandemic caused by the novel coronavirus, or COVID-19, and the
Company continues to monitor the impact of the pandemic on all aspects of its business, including how the pandemic
will impact its financial condition, liquidity, operations, clinical studies, employees, vendors, and industry. While the
pandemic did not materially affect the Company's financial results and business operations in the year ended
December 31, 2022 and 2021, the Company is unable to predict the impact that COVID-19 will have on its financial
position and operating results in future periods due to numerous uncertainties. The Company will continue to assess
the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary.
The Company’s capital resources and operations to date have been funded primarily with the proceeds from the
Collaboration Agreement and private and public equity offerings, as well as the proceeds from the debt financing
described in Note 14. In the future, the Company may seek to raise additional capital through equity offerings, debt
financings, marketing and distribution arrangements and other collaborations, strategic alliances and licensing
arrangements or other sources to enable it to complete the development and potential commercialization of its product
candidates. The COVID-19 outbreak and mitigation measures also have had, and may continue to have, an adverse
impact on global economic conditions, which could have an adverse effect on the Company’s ability to raise capital
when needed.
2. Summary of Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements include the accounts of Meira Holdings and its wholly owned
subsidiaries:
MeiraGTx Limited, a limited company incorporated under the laws of England and Wales;
MeiraGTx, LLC, a Delaware limited liability company (“Meira LLC”);
MeiraGTx UK II Limited, a limited company incorporated under the laws of England and Wales (“Meira UK II”);
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MeiraGTx Ireland DAC, a designated activity company incorporated under the laws of Ireland (“Meira Ireland”);
MeiraGTx Netherlands B.V., a private company with limited liability incorporated under the laws of the
Netherlands (“Meira Netherlands”);
MeiraGTx Belgium, a private company with limited liability incorporated under the laws of Belgium (“Meira
Belgium”);
BRI-Alzan, Inc., a Delaware corporation (“BRI-Alzan”);
MeiraGTx Bio Inc., a Delaware corporation (“Meira Bio”);
MeiraGTx B.V., a private company with limited liability incorporated under the laws of the Netherlands (“Meira
B.V.”);
MeiraGTx Neurosciences, Inc., a Delaware corporation (“Meira Neuro”);
MeiraGTx Therapeutics, Inc., a Delaware corporation (“Meira Therapeutics”); and
MeiraGTx UK Limited, a limited company incorporated under the laws of England and Wales (“Meira UK”).
All intercompany balances and transactions between the consolidated companies have been eliminated in
consolidation.
Use of Estimates
Management considers many factors in selecting appropriate financial accounting policies and controls, and in
developing the estimates and assumptions that are used in the preparation of these consolidated financial statements.
Management must apply significant judgment in this process. In addition, other factors may affect estimates, including
expected business and operational changes, sensitivity and volatility associated with the assumptions used in
developing estimates, and whether historical trends are expected to be representative of future trends. The estimation
process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management
must select an amount that falls within that range of reasonable estimates. This process may result in actual results
differing materially from those estimated amounts used in the preparation of the financial statements if these results
differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such
assumptions are reasonable when made. In preparing these consolidated financial statements, management used
significant estimates in the following areas, among others: collaboration revenue, the accounting for research and
development costs, share-based compensation, leases, asset retirement obligations, fair value of financial instruments
and tax incentive receivable.
Additionally, the Company has made estimates of the impact of the COVID-19 pandemic within the consolidated
financial statements and there may be changes to those estimates in future periods. Actual results may differ from
these estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with an original maturity of 90 days or less at the time of
purchase to be cash equivalents. Cash and cash equivalents consist of checking and money market accounts held at
large international banks that are readily convertible into cash.
Financial Instruments
The carrying value of accounts receivable-related party, tax incentive receivable, other current assets, and accounts
payable reported in the consolidated balance sheets equal or approximate fair value due to their short maturities.
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Tax Incentive Receivable
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Meira UK II is eligible to participate in a UK research and development tax incentive programs under which it is
eligible to receive a cash refund from His Majesty’s Revenue & Customs (“HMRC”) for a percentage of the qualified
research and development costs expended by Meira UK II under the small and medium sized enterprises (“SME”)
program and the research and development expenditures credit (“RDEC”) program. The SME cash refund is available
to companies with less than 500 employees and annual aggregate revenue of less than 100.0 million euros or total
aggregate assets less than 86.0 million euros during the reimbursable period. The Company’s estimate of the amount of
cash refund it expects to receive related to the SME and RDEC programs is included in tax incentive receivable in the
accompanying consolidated balance sheets and such amounts are recorded as a reduction of research and development
expense in the statements of operations. During the years ended December 31, 2022 and 2021, the Company recorded
reductions to research and development expenses of $6.8 million and $5.4 million, respectively.
In addition, the Company incurs Value Added Tax (“VAT”) on services provided by UK and EU vendors, which it is
entitled to reclaim. The Company’s estimate of the amount of cash refund it expects to receive related to VAT was $1.1
million and $1.9 million as of December 31, 2022 and 2021, respectively, which is included in other current assets in
the accompanying consolidated balance sheets.
Fair Value Measurements
Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an
orderly transaction between market participants at the measurement date and in the principal or most advantageous
market for that asset or liability. The fair value should be calculated based on assumptions that market participants
would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of
liabilities should include consideration of non-performance risk including the Company’s own credit risk.
The Company follows ASC Topic 820, Fair Value Measurements and Disclosures, or ASC 820, for application to
financial assets and liabilities. In addition to defining fair value, the standard expands the disclosure requirements
around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into
three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair
value measurement is reported in one of the three levels which are determined by the lowest level input that is
significant to the fair value measurement in its entirety. These levels are:
● Level 1: Observable inputs such as quoted prices in active markets for identical assets the reporting entity
has the ability to access as of the measurement date;
● Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or
indirectly; and
● Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity
to develop its own assumptions.
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The table below represents the values of the Company's financial assets and liabilities that are required to be measured
at fair value on a recurring basis (in thousands):
Description
Cash equivalents
Other long-term liabilities
Description
Cash equivalents
Other long-term liabilities
December 31,
2022
Fair Value Measurement Using:
Significant
Observable Inputs
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
(Level 3)
57,336
262
$
$
57,336
262
$
$
— $
— $
—
—
December 31,
2021
Fair Value Measurement Using:
Significant
Observable Inputs
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
(Level 3)
66,585
953
$
$
66,585
953
$
$
— $
— $
—
—
$
$
$
$
Equity Method and Other Investments
The Company accounts for equity investments under the equity method of accounting when the requirements for
consolidation are not met, and the Company has significant influence over the operations of the investee. Equity
method investments are initially recorded at cost and subsequently adjusted for the Company’s share of net income or
loss and cash contributions and distributions and are included in equity method and other investments in the
accompanying consolidated balance sheets. Equity investments that do not result in consolidation and are not
accounted for under the equity method are measured at fair value, with any changes in fair value recognized in net
income (loss). For any such investments that do not have readily determinable fair values, the Company elects the
measurement alternative to measure the investments at cost minus impairment, if any, plus or minus changes resulting
from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
Equity method investments are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. If it is determined that a loss in value of the equity method investment is
other than temporary, an impairment loss is measured based on the excess of the carrying amount of an investment
over its estimated fair value. Impairment analyses are based on current plans, intended holding periods, and available
information at the time the analysis is prepared.
Concentrations of Credit Risk
The Company maintains its cash and cash equivalents primarily in depository and money market accounts within two
large financial institutions in the United States and one large financial institution in the United Kingdom and Ireland.
Cash balances deposited at these major financial banking institutions exceed the insured limit. The Company has not
experienced any losses on its bank deposits and believes these deposits do not expose the Company to any significant
credit risk.
Intangible Assets
Intangible assets consist of purchased rights to licensed technology as it relates to the Company’s manufacturing
processes and has future alternative use in the Company’s operations. The licensed technology is being amortized on a
straight-line basis over 7 years, which represents the estimated periods of benefit and the expected pattern of
consumption (see Note 7).
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property, Plant and Equipment, Net
Property, plant and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the
straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are depreciated
over the lesser of their useful lives or the term of the lease (see Note 6).
The estimated useful lives of the asset categories are as follows:
Asset Category
Computer and office equipment
Laboratory equipment
Manufacturing equipment
Furniture and fixtures
Leasehold improvements
Useful Lives
3 years
5 years
7 years
5 years
lesser of useful life or
remaining term of lease
Expenditures for leasehold improvements are capitalized, and expenditures for maintenance and repairs are expensed
to operations as incurred.
ASC Topic 360, Property, Plant and Equipment, addresses the financial accounting and reporting for impairment or
disposal of long-lived assets. The Company reviews the recorded values of long-lived assets for impairment whenever
events or changes in business circumstances indicate that the carrying amount of an asset or group of assets may not be
fully recoverable. The Company did not record any material impairment charges in 2022 or 2021.
Leases
The Company accounts for leases in accordance with ASC 842. The Company determines if an arrangement is a lease
at contract inception. A lease exists when a contract conveys the right to control the use of identified property, plant, or
equipment for a period of time in exchange for consideration. The definition of a lease embodies two conditions:
(1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment),
and (2) the Company has the right to control the use of the identified asset. The Company accounts for the lease and
non-lease components as a single lease component.
From time to time the Company enters into direct financing lease arrangements that include a lessee obligation to
purchase the leased asset at the end of the lease term, a bargain purchase option, or provides for minimum lease
payments with a present value of 90% or more of the fair value of the leased asset at the date of lease inception.
Operating leases where the Company is the lessee are included in right-of-use (“ROU”) assets – operating leases and
lease obligations are included on the Company’s consolidated balance sheets. The lease obligations are initially and
subsequently measured at the present value of the unpaid lease payments at the lease commencement date and
subsequent reporting periods.
Finance leases where the Company is the lessee are included in ROU assets – finance leases, net and lease obligations
on the Company’s consolidated balance sheets. The lease obligations are initially measured in the same manner as for
operating leases and are subsequently measured at amortized cost using the effective interest method.
Key estimates and judgments include how the Company determined (1) the discount rate used to discount the unpaid
lease payments to present value, (2) lease term and (3) lease payments.
ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that
rate cannot be readily determined, its incremental borrowing rate. As most of the Company’s leases where it is the
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
lessee do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information
available at commencement date in determining the present value of lease payments. The Company’s incremental
borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount
equal to the lease payments under similar terms. The Company uses the implicit rate when readily determinable.
The lease term for all of the Company’s leases includes the non-cancellable period of the lease plus any additional
periods covered by either a lessee option to extend (or not to terminate) the lease that is reasonably certain to be
exercised, or an option to extend (or not to terminate) the lease controlled by the lessor.
The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease
payments made at or before the lease commencement date less any lease incentives received.
For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the
lease liability, minus any accrued lease payments, less the unamortized balance of lease incentives received. Lease
expense for lease payments is recognized on a straight-line basis over the lease term.
For finance leases, the ROU asset is subsequently amortized using the straight-line method from the lease
commencement date to the earlier of the end of its useful life or the end of the lease term unless the lease transfers
ownership of the underlying asset, or the Company is reasonably certain to exercise an option to purchase the
underlying asset. In those cases, the ROU asset is amortized over the useful life of the underlying asset. Amortization
of the ROU asset is recognized and presented separately from interest expense on the lease liability.
The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease
term of 12 months or less at lease commencement. Lease payments associated with short-term leases are recognized as
an expense on a straight-line basis over the lease term.
Asset Retirement Obligations
Accounting for asset retirement obligations requires legal obligations associated with the retirement of long-lived
assets to be recognized at fair value when incurred and capitalized as part of the related long-lived asset. In the
absence of quoted market prices, the Company estimates the fair value of its asset retirement obligations using Level 3
present value techniques, in which estimates of future cash flows associated with retirement activities are discounted
using a credit-adjusted risk-free rate. Asset retirement obligations currently reported on the Company’s consolidated
balance sheets were measured during a period of historically low interest rates. The impact on measurements of new
asset retirement obligations using different rates in the future may be significant.
The Company uses estimates to determine the asset retirement obligations at the end of the lease term and discounts
such asset retirement obligations using an estimated discount rate. Interest on the discounted asset retirement
obligation is amortized over the term of the lease using the effective interest method and is recorded as interest
expense in the consolidated statements of operations and comprehensive loss.
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The change in asset retirement obligations is as follows (in thousands):
Balance at beginning of period
Additional asset retirement obligations during the period
Amortization of interest
Effects of exchange rate changes
Balance at end of period
$
$
2,081 $
9
168
(79)
2,179
$
1,814
120
148
(1)
2,081
For the Years Ended December 31,
2022
2021
Share-Based Compensation Expense
Options
The Company grants share options to employees, non-employee members of the Company’s board of directors and
non-employee consultants as compensation for services performed. Employee and non-employee members of the
board of directors’ awards of share-based compensation are accounted for in accordance with ASC 718, Compensation
– Stock Compensation, or ASC 718. ASC 718 requires all share-based payments to employees and non-employee
directors, including grants of share options, to be recognized in the consolidated statement of operations and
comprehensive loss based on their grant date fair values. The grant date fair value of share options is estimated using
the Black-Scholes option valuation model.
Using this model, fair value is calculated based on assumptions with respect to (i) the fair value of the Company’s
ordinary shares on the grant date; (ii) expected volatility of the Company’s ordinary share price, (iii) the periods of
time over which the optionees are expected to hold their options prior to exercise (expected term), (iv) expected
dividend yield on the Company’s ordinary shares, and (v) risk-free interest rates.
The assumptions underlying these valuations represented management’s best estimate, which involved inherent
uncertainties and the application of management’s judgment. As a result, if the Company had used different
assumptions or estimates, the fair value of its ordinary shares and its share-based compensation expense could have
been materially different.
The fair value of ordinary shares after the Company’s IPO was determined based upon the closing share price on the
date of grant.
Since the Company’s ordinary shares had not been traded on a public exchange prior to the Company’s IPO and have
only been traded on a public exchange for a short period of time since the Company’s IPO, the Company believes that
it does not have sufficient company-specific information available to determine the expected term based on its
historical data. As a result, the expected term of share options granted to the optionees is determined using the average
of the vesting period and contractual life of the option, an accepted method for the Company’s option grants under the
Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin No. 107 and No. 110, Share-Based
Payment.
Similarly, the Company believes that its future volatility could differ materially during the expected term from the
volatility that would be calculated from its historical share prices to date. Consequently, expected volatility is based on
an analysis of guideline companies and the Company’s own volatility in accordance with ASC 718. The expected
dividend yield is zero as the Company has never paid dividends and does not currently anticipate paying any in the
foreseeable future. Risk-free interest rates are based on quoted U.S. Treasury rates for securities with maturities
approximating the option’s expected term.
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Restricted Share Units
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company grants restricted share units (“RSUs”) to employees, non-employee members of the Company’s board
of directors and non-employee consultants as compensation for services performed. Awards of RSUs are accounted for
in accordance with ASC 718, Compensation – Stock Compensation, or ASC 718. ASC 718 requires all share-based
payments to employees, non-employee members of the Company’s board of directors and non-employee consultants,
including grants of RSUs, to be recognized in the consolidated statement of operations and comprehensive loss based
on their grant date fair values. The grant date fair value of RSUs is determined using the closing market price of the
Company’s ordinary shares on the date of grant.
Collaboration Arrangements
The Company evaluates its collaborative arrangements pursuant to ASC 808, Collaborative Arrangements (“ASC
808”) and ASC 606, Revenue from Contracts with Customers (“ASC 606”). The Company considers the nature and
contractual terms of collaborative arrangements and assesses whether the arrangement involves a joint operating
activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards with
respect to the arrangement. If the Company is an active participant and is exposed to significant risks and rewards with
respect to the arrangement, the Company accounts for the arrangement as a collaboration under ASC 808. To date, the
Company has entered into two separate collaboration agreements, both of which are with Janssen, which were
determined to be within the scope of ASC 808.
ASC 808 does not address recognition or measurement matters related to collaborative arrangements. Payments
between participants pursuant to a collaborative arrangement that are within the scope of other authoritative
accounting literature on income statement classification are accounted for using the relevant provisions of that
literature. If the payments are not within the scope of other authoritative accounting literature, the income statement
classification for the payments is based on an analogy to authoritative accounting literature or if there is no appropriate
analogy, a reasonable, rational and consistently applied accounting policy election. Payments received from a
collaboration partner to which this policy applies may include upfront payments in respect of a license of intellectual
property, development and commercialization-based milestones, and royalties.
Refer to the discussion in Note 12 for further information related to the accounting for the Collaboration Agreement.
Revenue Recognition
Arrangements with collaborators may include licenses to intellectual property, research and development services,
manufacturing services for clinical and commercial supply, and participation on joint steering committees. The
Company evaluates the promised goods or services to determine which promises, or group of promises, represent
performance obligations. In contemplation of whether a promised good or service meets the criteria required of a
performance obligation, the Company considers the stage of development of the underlying intellectual property, the
capabilities and expertise of the customer relative to the underlying intellectual property, and whether the promised
goods or services are integral to or dependent on other promises in the contract. When accounting for an arrangement
that contains multiple performance obligations, the Company must develop judgmental assumptions, which may
include market conditions, reimbursement rates for personnel costs, development timelines and probabilities of
regulatory success to determine the stand-alone selling price for each performance obligation identified in the contract.
When the Company concludes that a contract should be accounted for as a combined performance obligation and
recognized over time, the Company must then determine the period over which revenue should be recognized and the
method by which to measure revenue. The Company generally recognizes revenue using a cost-based input method.
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Collaboration Agreement with Janssen is accounted for under ASC 808, however, as ASC 808 does not address
recognition or measurement matters such as determining the appropriate unit of accounting or when the recognition
criteria are met, the Company accounts for the consideration received from Janssen in accordance with ASC 606. In
accordance with ASC 606, the Company recognizes revenue when its customer or collaborator obtains control of
promised goods or services, in an amount that reflects the consideration which the Company expects to receive in
exchange for those goods or services. To determine revenue recognition for arrangements that the Company
determines are within the scope of ASC 606, it performs the following five steps:
i.
ii.
identify the contract(s) with a customer;
identify the performance obligations in the contract;
iii.
determine the transaction price;
iv.
v.
allocate the transaction price to the performance obligations within the contract; and
recognize revenue when (or as) the entity satisfies a performance obligation.
The Company only applies the five-step model to contracts when it determines that it is probable it will collect the
consideration it is entitled to in exchange for the goods or services it transfers to the customer.
At contract inception, once the contract is determined to be by analogy within the scope of ASC 606, the Company
assesses the goods or services promised within the contract to determine whether each promised good or service is a
performance obligation. The promised goods or services in the Company’s arrangements typically consist of a license
to the Company’s intellectual property and research, development and manufacturing services. The Company may
provide options to additional items in such arrangements, which are accounted for as separate contracts when the
customer elects to exercise such options, unless the option provides a material right to the customer. Performance
obligations are promises in a contract to transfer a distinct good or service to the customer that (i) the customer can
benefit from on its own or together with other readily available resources, and (ii) is separately identifiable from other
promises in the contract. Goods or services that are not individually distinct performance obligations are combined
with other promised goods or services until such combined group of promises meet the requirements of a performance
obligation.
The Company determines transaction price based on the amount of consideration the Company expects to receive for
transferring the promised goods or services in the contract. Consideration may be fixed, variable, or a combination of
both. At contract inception for arrangements that include variable consideration, the Company estimates the
probability and extent of consideration it expects to receive under the contract utilizing either the most likely amount
method or expected amount method, whichever best estimates the amount expected to be received. The Company then
considers any constraints on the variable consideration and includes in the transaction price variable consideration to
the extent it is deemed probable that a significant reversal in the amount of cumulative revenue recognized will not
occur when the uncertainty associated with the variable consideration is subsequently resolved.
The Company then allocates the transaction price to each performance obligation based on the relative standalone
selling price and recognizes as revenue the amount of the transaction price that is allocated to the respective
performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied.
For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the
nature of the combined performance obligation to determine whether the combined performance obligation is satisfied
over time or at a point in time and, if over time, the appropriate method of measuring progress. The Company
evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and
related revenue recognition.
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company records amounts as accounts receivable when the right to consideration is deemed unconditional. When
consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or
services to the customer under the terms of a contract, a contract liability is recorded as deferred revenue.
Amounts received prior to satisfying the revenue recognition criteria are recognized as deferred revenue in the
Company’s consolidated balance sheet. Amounts expected to be recognized as revenue within the 12 months following
the balance sheet date are classified as deferred revenue – related party, current. Amounts not expected to be
recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue –
related party.
The Company’s collaboration revenue arrangements include the following:
Up-front License Fees: If a license is determined to be distinct from the other performance obligations identified in the
arrangement, the Company recognizes revenues from nonrefundable, up-front fees allocated to the license when the
license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are
bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance
obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if
over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable,
up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the
measure of performance and related revenue recognition.
Milestone Payments: At the inception of an agreement that includes research and development milestone payments,
the Company evaluates each milestone to determine when and how much of the milestone to include in the transaction
price. The Company first estimates the amount of the milestone payment that the Company could receive using either
the expected value or the most likely amount approach. The Company primarily uses the most likely amount approach
as that approach is generally most predictive for milestone payments with a binary outcome. Then, the Company
considers whether any portion of that estimated amount is subject to the variable consideration constraint (that is,
whether it is probable that a significant reversal of cumulative revenue would not occur upon resolution of the
uncertainty.) The Company updates the estimate of variable consideration included in the transaction price at each
reporting date which includes updating the assessment of the likely amount of consideration and the application of the
constraint to reflect current facts and circumstances.
Royalties: For arrangements that include sales-based royalties, including milestone payments based on a level of sales,
and the license is deemed to be the predominant item to which the royalties relate, the Company will recognize
revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of
the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any
revenue related to sales-based royalties or milestone payments based on the level of sales.
Research and Development Services: The Company is incurring research and development costs, with Janssen
responsible for up to 100% of the costs, depending on the type of research and development services being performed.
The Company records costs associated with the development activities as research and development expenses in the
consolidated statement of operations and comprehensive loss consistent with ASC 730, Research and Development.
The reimbursement of the research and development costs by Janssen is representative of the joint risk sharing nature
of the arrangement. The Company considered the guidance in ASC 808 and recognizes the payments received from
Janssen as a reduction to research and development expense when the related costs are incurred.
Research and Development
Research and development costs are charged to expense as incurred. These costs include, but are not limited to,
employee-related expenses, including salaries, benefits and travel of the Company’s research and development
F-17
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
personnel; expenses incurred under agreements with contract research organizations and investigative sites that
conduct clinical and preclinical studies and for the drug product for the clinical studies and preclinical activities;
facilities; supplies; rent, insurance, certain legal fees, share-based compensation, depreciation, other costs associated
with clinical and preclinical activities and regulatory operations and acquisition of in process research and
development write-offs. Research funding under collaboration agreements and refundable research and development
credits / tax credits are recorded as an offset to these costs.
Costs for certain development activities, such as Company funded outside research programs, are recognized based on
an evaluation of the progress to completion of specific tasks with respect to their actual costs incurred. Payments for
these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs
incurred, and are reflected in the consolidated financial statements as prepaid or accrued research and development
expenses, as the case may be.
Foreign Currencies
The Company’s consolidated financial statements are presented in U.S. dollars, the reporting currency of the
Company. The financial position and results of operations of Meira UK II, Meira Ireland, Meira Netherlands, Meira
Belgium and Meira B.V. are measured using the foreign subsidiaries’ local currency as the functional currency. These
entities’ cash accounts holding U.S. dollars are remeasured based upon the exchange rate at the date of remeasurement
with the resulting gain or loss included in the consolidated statements of operations and comprehensive loss. Expenses
of such subsidiaries have been translated into U.S. dollars at average exchange rates prevailing during the period.
Assets and liabilities have been translated at the rates of exchange on the consolidated balance sheet dates. The
resulting translation gain and loss adjustments are recorded directly as a separate component of shareholders' equity
and as other comprehensive loss on the consolidated statements of operations and comprehensive loss.
Income Taxes
Income taxes are recorded in accordance with ASC Topic 740, Income Taxes, or ASC 740, which provides for deferred
taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets
and liabilities are determined based on the difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Realization of
net deferred tax assets is dependent on future taxable income. Valuation allowances are provided if, based upon the
weight of available evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized.
Realization of net deferred tax assets is dependent on future taxable income (see Note 11).
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax
positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely
than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based
upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of
December 31, 2022 and 2021, the Company recorded unrecognized tax positions of $0.9 and $0.7 million,
respectively. No interest and penalties have been accrued relative to the unrecognized tax positions.
The Company is required to estimate income taxes in each of the jurisdictions in which it operates.
Net Loss per Ordinary Share
Basic net loss per ordinary share is computed by dividing net loss by the weighted average number of shares of the
Company’s ordinary shares outstanding during the period of computation. Diluted net loss per ordinary share is
F-18
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
computed similar to basic net loss per share except that the denominator is increased to include the number of
additional ordinary shares that would have been outstanding if the ordinary share equivalents had been issued at the
beginning of the year and if the additional ordinary shares were dilutive (treasury stock method) or the two-class
method, whichever is more dilutive. For all periods presented, basic and diluted net loss per ordinary share are the
same as any additional ordinary share equivalents would be anti-dilutive.
The following securities are considered to be ordinary share equivalents, but were not included in the computation of
diluted net loss per ordinary share because to do so would have been anti-dilutive:
Share options
Restricted share units
Warrants
Restricted ordinary shares subject to forfeiture
Other Comprehensive Loss
December 31,
December 31,
2022
6,858,409
2,182,500
700,000
14,049
9,754,958
2021
5,924,690
1,415,000
—
173,097
7,512,787
Other comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions
and other events and circumstances from non-owner sources. The only component of other comprehensive loss
impacting the Company is foreign currency translation.
Segment Information
Management has concluded it has a single reporting segment for purposes of reporting financial condition and results
of operations.
The Company’s license revenue, research funding and deferred revenue from its Collaboration Agreement are
generated in the United Kingdom.
The following table summarizes long-lived assets by geographical area (in thousands):
United States
United Kingdom
European Union
December 31,
2022
December 31,
2021
20,809
37,778
105,311
163,898
$
$
23,636
43,349
69,936
136,921
$
$
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments, which adds a new Topic 326 to the Codification and removes the thresholds
that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans,
receivables, and held-to-maturity debt securities. Under current GAAP, companies generally recognize credit losses
when it is probable that the loss has been incurred. The revised guidance will remove all recognition thresholds and
will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis
of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument’s
contractual life. ASU 2016-13 also amends the credit loss measurement guidance for available-for-sale debt securities
and beneficial interests in securitized financial assets. The guidance is applicable for fiscal years beginning after
December 15, 2019 and interim periods within those years, however, the FASB extended the
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
effective date for smaller reporting companies to fiscal years beginning after December 15, 2022. The Company does
not believe that the adoption of this standard will have a significant impact on its related disclosures.
3. Acquisition
Bullseye Therapeutics, Inc.
On October 4, 2021 (the “Bullseye Closing Date”), the Company acquired the stock of Bullseye, a company engaged
in developing mechanisms to deliver retinal drugs and gene therapies to the eye. As a result, Bullseye is a wholly-
owned subsidiary of the Company and was renamed MeiraGTx Therapeutics, Inc.
In connection with the acquisition of Bullseye, the consideration to Bullseye’s selling stockholders consisted of an
aggregate of 80,276 of the Company’s ordinary shares of which (i) 12,040 ordinary shares were issued on the Bullseye
Closing Date, (ii) 28,097 restricted ordinary shares were issued on the Bullseye Closing Date, with 50% of such
restricted ordinary shares scheduled to vest on each of the first and second anniversaries of the Bullseye Closing Date,
and (iii) 40,139 ordinary shares will be issued 18 months following the Bullseye Closing Date, provided that the shares
described in clauses (ii) and (iii) are subject to certain indemnification claims under the Bullseye Merger
Agreement. The Company also assumed $0.5 million of Bullseye’s liabilities (“Assumed Liabilities”). Total
consideration of $1.5 million was based on the closing price of the Company’s ordinary shares of $13.31 per share on
October 1, 2021, plus the Assumed Liabilities.
The Company determined this transaction represented an asset acquisition as substantially all of the value was in the
intellectual property as defined by ASC 805, Business Combinations (“ASC 805”). The asset acquisition of in-process
research and development was recorded at a fair value of $1.5 million as of October 4, 2021. The acquired in process
research and development was immediately charged to research and development expense in the consolidated
statement of operations and comprehensive loss as of the acquisition date since the Company determined that there
was no alternative future use for these assets.
The 40,139 ordinary shares that are to be issued 18 months following the Bullseye Closing Date were recorded as a
liability at a fair value of $0.5 million on the Bullseye Closing Date. At December 31, 2022 and 2021, the liability
was revalued to $0.3 million and $1.0 million, respectively, based upon the closing price of the Company’s ordinary
shares of $6.52 and $23.74 per share on December 31, 2022 and 2021, respectively. The $0.7 million and $0.5 million
change in fair value was recorded as a fair value adjustment for the years ended December 31, 2022 and 2021,
respectively. The change in fair value was included as part of research and development expenses in the prior year, but
for comparative purposes it has been presented as a fair value adjustment in the consolidated statements of operations
and comprehensive loss.
4. Equity Method and Other Investments
The Company’s investments consist of the following (in thousands):
Investee
Visiogene LLC
Other
Total equity method and
other investments
Investment Type
Equity Method Investment
Equity Investment
December 31, 2022
Ownership Percentage Carrying Value Cost Basis
5,156 $ 5,165
1,500
1,170
25 % $
1.6 %
$
6,326 $ 6,665
F-20
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Visiogene LLC
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On January 4, 2021, the Company and Visiogene LLC (“Visiogene”) entered into a License and Investment Agreement
(“Visiogene License Agreement”) for an exclusive, worldwide license to certain of Visiogene’s intellectual property
relating to ocular gene therapy. Concurrently, the Company and Visiogene entered into a Preferred Unit Purchase
Agreement (“Visiogene Unit Agreement”) pursuant to which the Company purchased 3,000,000 Visiogene preferred
units. In connection with the two Visiogene agreements, the Company paid $5.0 million in cash and issued to
Visiogene 75,000 ordinary shares of the Company with a fair market value of $1.2 million based on the closing price
of the Company’s ordinary shares on the date of closing.
The Company accounted for the payments under the Visiogene License Agreement and Visiogene Unit Agreement as a
basket transaction and allocated $1.0 million to the Visiogene License Agreement and the remaining $5.2 million was
allocated to the Visiogene preferred units. The $1.0 million allocated to the Visiogene License Agreement was
expensed as acquired in-process research and development as the Company determined there was no alternative future
use. The Company accounts for this investment using the equity method of accounting.
During the years ended December 31, 2022 and 2021, the Company recorded de minimis research and development
expenses related to the Company’s share of Visiogene’s losses.
Other Equity Investment
During the year ended December 31, 2022, the Company recognized a $0.3 million impairment due to the dilution of
the Company’s ownership percentage of the investment. The $0.3 million impairment was recorded as a fair value
adjustment for the year ended December 31, 2022.
5. Prepaid Expenses
Prepaid expenses at December 31, 2022 and 2021 consist of the following (in thousands):
Clinical trial costs
Research and development
Insurance
Dues and license fees
Facilities costs
Manufacturing costs
Other
December 31,
2022
December 31,
2021
3,411
1,220
1,485
909
539
347
222
8,133
$
$
2,322
991
2,122
1,185
455
624
403
8,102
$
$
F-21
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Property, Plant and Equipment, net
Property, plant and equipment, net at December 31, 2022 and 2021 consist of the following (in thousands):
Leasehold improvements
Manufacturing equipment
Laboratory equipment
Computer and office equipment
Furniture and fixtures
Less: Accumulated depreciation
December 31,
2022
December 31,
2021
91,053
17,373
13,804
6,787
642
129,659
(20,393)
109,266
$
$
60,878
12,156
10,868
5,750
687
90,339
(14,479)
75,860
$
$
In connection with certain operating leases, the Company has determined that it has asset retirement obligations in the
aggregate amount of $3.9 million at the end of those leases. The Company discounted the asset retirement obligations
using an 8% discount rate and recorded an asset retirement obligation in the aggregate amount of $1.8 million, which
is included in leasehold improvements and is being amortized over the term of the respective leases.
Depreciation and amortization expense related to property, plant and equipment was $7.3 million and $6.3 million for
the years ended December 31, 2022 and 2021, respectively.
7.
Intangible Assets
In November 2020, the Company entered into a non-exclusive, royalty-free technology license agreement that required
the Company to pay an upfront payment to the licensor of $2.1 million. The Company accounted for the transaction as
an asset acquisition and recorded an intangible asset as it was determined to have alternative future uses in connection
with the Company’s manufacturing capabilities.
The following table presents the details of the Company’s intangible assets as of December 31, 2022 and 2021 (in
thousands):
Licensed Technology
Less: Accumulated amortization
December 31,
2022
December 31,
2021
$
$
1,900
(565)
1,335
$
$
2,119
(328)
1,791
The intangible asset is being amortized over a period of seven years. Amortization expense of $0.2 million and $0.3
million was recorded as a component of research and development expenses for the years ended December 31, 2022
and 2021, respectively.
F-22
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2022, the expected amortization expense for the next five years and thereafter is as follows (in
thousands):
2023
2024
2025
2026
2027
Thereafter
Total amortization
8. Accrued Expenses
Amortization
Expense
$
$
272
272
272
272
247
—
1,335
Accrued expenses at December 31, 2022 and 2021 were comprised of the following (in thousands):
Clinical trial costs
Compensation and benefits
Research and development
Manufacturing costs
Fixed assets
Professional fees
Consulting
Other
9. Share-Based Compensation
Equity Incentive Plans
December 31,
2022
December 31,
2021
$
$
13,041
9,600
7,400
4,326
3,093
732
694
932
39,818
$
$
12,524
6,029
1,735
2,889
2,077
1,018
858
456
27,586
The Company’s 2018 Incentive Award Plan and 2016 Equity Incentive Plan (collectively, the “Plans”), were adopted
by the Company’s board of directors and shareholders. Under the Plans, the Company has granted share options and
restricted share units (“RSUs”) to selected officers, employees, non-employee members of the Company’s board of
directors and non-employee consultants. The Company’s board of directors or a committee thereof administers the
Plans. Upon the adoption of the 2018 Incentive Award Plan, the Company ceased issuing awards under the 2016
Equity Incentive Plan. The number of shares available for issuance under the 2018 Incentive Award Plan are increased
on January 1 of each calendar year beginning in 2019 and ending in and including 2028, by an amount equal to the
lesser of (A) 4% of the ordinary shares outstanding on the final day of the immediately preceding calendar year and
(B) a smaller number of shares determined by the Company's board of directors. Under the 2018 Incentive Award Plan
the Company initially reserved up to 3,054,996 shares for issuance, which has been increased to 9,171,660 as of
December 31, 2022. As of December 31, 2022, 843,802 shares remain available for future issuance. In January 2023,
the number of shares available for issuance under the 2018 Incentive Award Plan increased by 1,939,088 shares. Also,
in February 2023, the Company’s board of directors approved up to 2,250,000 options and restricted share units to be
granted to certain executives, employees and consultants, in each case, under the 2018 Incentive Award Plan.
F-23
Table of Contents
Options
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the Company’s share option activity related to employees, non-employee members of the board of
directors and non-employee consultants as of and for the years ended December 31, 2022 and 2021 is as follows (in
thousands, except share and per share amounts):
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (years)
Number of
Options
Outstanding at December 31, 2020
Granted
Exercised
Forfeited
Outstanding at December 31, 2021
Granted
Exercised
Forfeited
Outstanding at December 31, 2022
Options exercisable at December 31, 2022
Aggregate intrinsic value of options outstanding as
of December 31, 2022
Aggregate intrinsic value of options exercisable as
of December 31, 2022
5,924,690
1,492,400
4,824,771
1,667,700
$
$
(186,638) $
(381,143) $
$
$
(27,081) $
(531,600) $
$
$
6,858,409
4,547,271
$
$
1,819
1,810
11.85
15.53
9.16
12.22
13.16
18.54
8.53
17.52
14.03
12.18
7.40 years
6.86 years
6.00 years
Options granted under the Plans have a maximum contractual term of ten years. Options granted generally vest 25%
on the first anniversary of the date of grant and the balance ratably over the next 36 months. Options granted to
directors when they join the board generally vest in 36 equal monthly installments following the date of grant, and
annual options granted to directors generally vest on the earlier of the first anniversary of the date of grant or the day
before the Company’s next annual meeting of shareholders after the date of grant.
The total share-based compensation expense recorded in connection with the options was $16.1 million and $14.8
million, of which $5.7 million and $6.2 million was recorded as general and administrative expense and $10.4 million
and $8.6 million was recorded as research and development expense during the years ended December 31, 2022 and
2021, respectively.
The total fair value of options vested during the years ended December 31, 2022 and 2021 was $16.2 million and
$14.4 million, respectively.
The weighted average grant date fair value of options granted during the years ended December 31, 2022 and 2021
was $12.81 and $11.44, respectively. The grant date fair values of the share options granted were estimated using the
Black-Scholes option valuation model with the following ranges of assumptions (see Note 2):
Risk-free interest rate
Expected volatility
Expected dividend yield
Expected term (in years)
2022
2021
1.56 - 4.23% 0.62 - 1.39%
80%
0%
5.5 - 6.1
90%
0%
5.5 - 6.1
F-24
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2022, the total compensation expense relating to unvested options granted that had not yet been
recognized was $24.7 million, which is expected to be recognized over a period of 4.0 years. The Company will issue
shares upon exercise of options from ordinary shares reserved under the Plans.
Restricted Share Units
A summary of the Company’s RSU activity related to employees, non-employee members of the board of directors
and non-employee consultants for the years ended December 31, 2022 and 2021 is as follows:
Outstanding at December 31, 2020
Granted
Vested
Forfeited
Outstanding at December 31, 2021
Granted
Vested
Forfeited
Outstanding at December 31, 2022
Weighted-
Average
Grant Date
Fair Value
Number of
Restricted
Share Units
545,000
870,000
$
$
— $
— $
$
$
$
$
$
1,415,000
1,180,000
(397,500)
(15,000)
2,182,500
20.02
15.36
—
—
17.16
20.12
18.40
8.25
18.59
RSUs granted generally vest 50% on the second anniversary of the date of grant and 25% on the third and fourth
anniversaries of the date of grant. Annual RSUs granted to directors generally vest in a single installment on the
earliest to occur of the first anniversary of the grant date or the day immediately prior to the date of the next annual
meeting of the Company’s shareholders occurring after the date of grant. The RSUs granted to the directors in June
2021 will be paid on or within 30 days after the date a director ceases to serve on the board. For RSUs granted in
future years, the directors may elect whether to defer the payment of their annual RSU awards under the Deferred
Compensation Plan for Non-Employee Directors, which was adopted by the board on December 17, 2021. The related
share-based compensation expense, which is recognized ratably over the requisite service period, is included in general
and administrative and research and development expenses, as applicable, in the consolidated statements of operations
and comprehensive loss.
Total share-based compensation expense recorded in connection with the RSUs was $12.5 million and $6.0 million, of
which $8.8 million and $4.9 million was recorded as general and administrative expense and $3.7 million and $1.1
million was recorded as research and development expense during the years ended December 31, 2022 and 2021,
respectively.
As of December 31, 2022, the total compensation expense relating to unvested RSUs granted that had not yet been
recognized was $26.9 million, which is expected to be recognized over a period of 3.0 years.
During the years ended December 31, 2022 and 2021 the Company recognized total share-based compensation
expense in the accompanying consolidated statements of operations and comprehensive loss as follows (in thousands):
Research and development
General and administrative
Total share-based compensation
Years Ended December 31,
2021
2022
$
$
14,165
14,458
28,623
$
$
9,685
11,099
20,784
F-25
Table of Contents
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company does not expect to realize any tax benefits from its share option activity or the recognition of share-
based compensation expense because the Company currently has net operating losses and has a full valuation
allowance against its deferred tax assets. Accordingly, no amounts related to excess tax benefits have been reported in
cash flows from operations or cash flows from financing activities for the years ended December 31, 2022 and 2021.
10. Ordinary Shares
2022
Private Placement
On November 9, 2022, the Company entered into a securities purchase agreement with Johnson & Johnson Innovation
– JJDC, Inc. (“JJDC”), the investment arm of Johnson & Johnson, pursuant to which the Company, in a private
placement, agreed to issue and sell to JJDC an aggregate of 3,742,514 ordinary shares at a purchase price of $6.68 per
share, for gross proceeds of approximately $25.0 million.
2021
Equity Method and Other Investments
As discussed in Note 3, on January 4, 2021, the Company issued 75,000 ordinary shares in connection with the
Visiogene transaction in the amount of $1.2 million.
Acquisitions
As discussed in Note 3, on October 4, 2021 the Company issued 12,040 ordinary shares as well as 28,097 ordinary
shares which are subject to vesting in connection with the Bullseye acquisition.
On October 9, 2021, the Company issued 58,000 holdback ordinary shares in connection with a previous acquisition.
11. Income Taxes
For the years ended December 31, 2022 and 2021, the Company recognized a tax benefit of $0.
As of December 31, 2022, the Company had U.S. federal and state net operating losses (“NOLs”) and foreign
carryforward tax losses which are available to reduce future taxable income of (in thousands):
United Kingdom
United States
Other
Federal
$ 187,939
63,829
$
22,274
$
State/City
$
—
64,405
$
—
$
The U.S. federal and state NOLs incurred prior to January 1, 2018 in the amount of approximately $1.0 million and
$0.8 million, respectively, will begin to expire in 2036. The U.S. NOLs incurred after December 31, 2017 and the UK
carryforward tax losses will be indefinitely carried forward. Also, as of December 31, 2022, the Company had orphan
drug and research and development credits in the U.S. in the amount of $9.4 million which will begin to expire in 2036
and research and development credits of $2.4 million in the UK which can be carried forward indefinitely. The U.S.
NOLs and UK carryforward tax losses may become subject to an annual limitation in the
F-26
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
event of certain cumulative changes in the ownership interest of significant shareholders, as defined under Section 382
of the Internal Revenue Code, as well as UK tax rules. This could limit the amount of NOLs and carryforward tax
losses that the Company can utilize annually to offset future taxable income or tax liabilities. As of December 31,
2021, the Company had performed such an analysis and determined that there were no limitations in the UK. However,
for U.S. purposes, the Company determined that a change of ownership occurred in April 2016 and again in June
2018. The Company is still in the process of determining the annual limitation on losses that occurred prior to June
2018.
The Company’s pre-tax loss is as follows (in thousands):
United Kingdom
United States
Other
F-27
$
December 31, 2022 December 31, 2021
(17,056)
(49,223)
(13,282)
(79,561)
(54,636) $
(54,513)
(20,467)
(129,616) $
$
Table of Contents
MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company is subject to the corporate tax rate in the UK as a limited UK corporation.
The following table summarizes a reconciliation of income tax benefit compared with the amounts at the UK statutory
income tax rate (in thousands):
Statutory rate
Permanent differences - other
RTP and other adjustment
State and local rate, net of federal
tax
U.K. tax credit
U.S. tax credit
Foreign tax rate differential
UK rate change (25% & 19% at
expected DTA turn)
US state rate change
Section 162(m) deferred adjustment
Change in valuation allowance
Actual income tax benefit effective
tax rate
December 31, 2022
December 31, 2021
(24,627)
2,323
1,244
19.00 %
(1.79)%
(0.96)%
(15,117)
934
(2,735)
19.00 %
(1.17)%
3.44 %
(5,660)
2,296
(2,436)
195
4.37 %
(1.77)%
1.88 %
(0.15)%
(1,973)
(3)
1,386
27,255
1.52 %
0.00 %
(1.07)%
(21.03)%
(5,850)
(1,464)
(1,491)
(540)
7.35 %
1.84 %
1.87 %
0.68 %
(10,247)
(447)
—
36,957
12.88 %
0.56 %
0.00 %
(46.45)%
—
0.00 %
—
0.00 %
The Expense/(Benefit) for income taxes from continuing operations consists of the following (in thousands):
Current Tax Expense/(Benefit)
United Kingdom
United States
Other
Total Current
Deferred Tax Expense/(Benefit)
United Kingdom
United States
Other
Total Deferred
Change in Valuation Allowance
Total Income Tax Expense/(Benefit)
December 31, 2022 December 31, 2021
—
—
—
—
(8,708)
(17,466)
219
(25,955)
25,955
—
—
—
—
—
(16,079)
(17,369)
(3,509)
(36,957)
36,957
—
F-28
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred Tax Assets/(Liabilities) (in thousands):
Deferred Tax Assets:
Net operating loss carryforwards
Capitalized research and development
Share-based compensation
R&D credit
Lease liability
Other
Deferred tax assets
Deferred Tax Liabilities:
Indefinite-lived intangibles and fixed assets
Depreciation
Right of use assets
Less: valuation allowance
Net deferred tax liability
$
$
December 31, 2022
December 31, 2021
74,350
16,288
13,684
10,837
6,461
3,745
125,365
(186)
(2,935)
(6,207)
(116,223)
(186)
$
$
74,007
—
10,314
7,498
7,040
1,481
100,340
(196)
(3,339)
(6,733)
(90,268)
(196)
ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available
evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance,
after consideration of the reversal of the deferred tax liabilities for the ROU assets and fixed assets, against its deferred
tax assets at December 31, 2022 and 2021 because the Company's management has determined that is it more likely
than not that these assets will not be fully realized.
Changes to the UK corporation tax rates have been announced which will impact future accounting periods. Finance
Act 2021 increases the UK corporation tax rate from 19% to 25% effective April 1, 2023 for companies with profits in
excess of GBP 250,000. As the Company does not expect to be able to utilize its carryforward tax losses in the UK
until after April 2023, the deferred tax has been calculated using a tax rate of 25%.
As of December 31, 2022 and 2021, the Company recorded unrecognized tax positions of $0.9 million and $0.7
million, respectively. The unrecognized tax positions are netted with deferred tax assets above with full valuation
allowance. The changes to unrecognized tax positions for 2022 and 2021 were as follows (in thousands):
Unrecognized tax benefits as of January 1
Gross increases/(decreases) related to current year
Gross increases/(decreases) related to prior years
Foreign currency translation
Unrecognized tax positions as of December 31
December 31, 2022 December 31, 2021
513
666 $
$
165
279
(12)
(8)
—
—
666
937 $
$
The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of
December 31, 2022 and 2021, the Company had no accrued interest or penalties related to uncertain tax positions and
no amounts have been recognized in the Company's statements of operations and comprehensive loss.
The Company files income tax returns in the United States, UK, various foreign jurisdictions and various U.S. state
jurisdictions. In the U.S., all years remain subject to examination. The earliest year subject to examination in the UK
is 2020.
F-29
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MeiraGTx Holdings plc is a UK tax resident with no earnings in its foreign subsidiaries and the Company does not
expect any temporary basis difference in its investment in these subsidiaries to reverse in the foreseeable future.
Therefore, the Company has not recorded deferred taxes on the outside basis difference in its foreign subsidiaries. It is
not probable to compute the amounts, if any.
12. Related Party Transactions
Collaboration and License Agreements
Janssen Pharmaceuticals, Inc.
On January 30, 2019, the Company entered into a Collaboration Agreement with Janssen for the research,
development and commercialization of gene therapies for the treatment of IRD. Under the agreement, Janssen paid the
Company a non-refundable upfront fee of $100.0 million. Janssen and the Company will collaborate to develop the
Company’s current clinical programs in retinitis pigmentosa and two genetic forms of achromatopsia and Janssen has
the exclusive right to commercialize these three product candidates (“Clinical IRD Product Candidates”) globally.
Pursuant to the Collaboration Agreement, the Company and Janssen also agreed on a research collaboration to develop
a pipeline of preclinical inherited retinal disease gene therapy candidates (“Research IRD Product Candidates”). The
parties will select and prioritize the Research IRD Product Candidates and Janssen has the right to opt-in for a fee for
each of the specified targets (each an “Option Target”) to obtain certain development, manufacturing and
commercialization rights for the Research IRD Product Candidates.
Unless terminated earlier under certain termination clauses, the Collaboration Agreement will continue in effect, on a
product-by-product and country-by-country basis, until such time as the royalty terms expire in such country. The
Company has determined enforceable rights exist in the Collaboration Agreement as the termination clauses are
substantive termination penalties by way of the non-refundable upfront fee and the reversion of any licensed
intellectual property granted to Janssen upon the termination of the agreement.
On February 27, 2019, in connection with a private placement, the Company issued 2,898,550 ordinary shares to
JJDC, the investment arm of Johnson & Johnson and owner of Janssen, on the same terms and conditions as the other
investors in the offering. After the offering, JJDC became a related party. On November 9, 2022, the Company entered
into a securities purchase agreement with JJDC, pursuant to which the Company, in a private placement, agreed to
issue and sell to JJDC an aggregate of 3,742,514 ordinary shares at a purchase price of $6.68 per share, for gross
proceeds of approximately $25.0 million.
Clinical IRD Product Candidates
Under the Collaboration Agreement, the Company and Janssen will jointly develop Clinical IRD Product Candidates
to permit Janssen to commercialize such Clinical IRD Product Candidates under an exclusive license from the
Company. In general, the Company will have the primary responsibility to develop each Clinical IRD Product
Candidate in accordance with the development plan for each Clinical IRD Product Candidate, including where
applicable, conducting any necessary research in order to submit the applicable regulatory filings to regulatory
authorities. The Company will manufacture these products in its cGMP manufacturing facilities for both clinical and
commercial supply. Janssen will pay 100% of the clinical and commercialization costs of the products and the
Company is eligible to receive untiered 20% royalties on net sales of products and additional development and
commercialization milestones up to $340.0 million. The Company received its first milestone payment of $30.0
million in December 2021.
F-30
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Research IRD Product Candidates
Under the Collaboration Agreement, the Company and Janssen will collaborate to develop Research IRD Product
Candidates, with Janssen paying for the majority of the research costs. Janssen has the right to exclusively license any
product coming out of the collaboration at the time of an investigational new drug application for an additional fee for
each Research IRD Product Candidate. Janssen will then pay 100% of the clinical and commercialization costs for
these Research IRD Product Candidates and the Company will receive an untiered royalty on net sales in the high
teens as well as development milestones for each Research IRD Product Candidate.
Revenue Recognition under the Collaboration Agreement
The Collaboration Agreement is accounted for under ASC 808, however, ASC 808 does not address recognition or
measurement matters. Therefore, the Company will account for the recognition and measurement of consideration
under ASC 606. In determining the appropriate amount of revenue to be recognized under ASC 606, the Company
performed the following steps: (i) identified the promised goods or services in the contract; (ii) determined whether the
promised goods or services are performance obligations including whether they are distinct in the context of the
contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation
of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company
satisfies each performance obligation. The Company evaluated the potential performance obligations in the contract,
which included the exclusive license to Clinical IRD Product Candidates, the research, development and
manufacturing services (“the services”), and the participation in various joint committees and determined that none of
the performance obligations by themselves were distinct. Goods and services that are not distinct are bundled with
other goods or services in the contract until a bundle of goods or services that is distinct is created. The services, when
combined with the licenses, represent a bundle and should be accounted for as a single performance obligation due to
the relevance of the services to the value of the early-stage license and the potential for the intellectual property to be
significantly modified during the services period. The Company also evaluated whether or not the right to purchase
exclusive option rights for specified Research IRD Product Candidates represents future performance obligations and
concluded that these represent a separate buyer decision at market rates, rather than a material right performance
obligation. As such, these options have been excluded from the initial allocation of transaction price and the Company
will account for these options as separate contracts when and if Janssen elects to exercise the options.
Under ASC 606, the Company recognized collaboration revenue using the cost-to-cost input method, which it believes
best depicts the transfer of control to the customer. Under the cost-to-cost input method, the extent of progress towards
completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying
the combined performance obligation by the potential product candidate. Under this method, revenue is being recorded
as a percentage of the estimated transaction price based on the extent of progress towards completion. Under ASC 606,
the estimated transaction price includes variable consideration subject to constraints. The Company does not include
variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue
recognized will occur when any uncertainty associated with the variable consideration is resolved. The estimate of the
Company’s measure of progress and estimate of variable consideration to be included in the transaction price will be
updated at each reporting date as a change in estimate. The amount related to the unsatisfied portion will be recognized
as that portion is satisfied over time.
Under ASC 606 the Company accounts for (i) the licenses it conveyed with respect to the Clinical IRD Product
Candidates and (ii) its obligations to perform services as a single performance obligation under the Collaboration
Agreement with Janssen on a product candidate basis. Janssen’s right to purchase exclusive options to obtain certain
development, manufacturing and commercialization rights are accounted for separately as they do not represent
material rights, based on the criteria of ASC 606. Upon the exercise of any purchased option by Janssen, the contract
promises associated with an Option Target would use a separate cost-to-cost model for purposes of revenue
recognition under ASC 606.
F-31
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the year ended December 31, 2019, the Company received a $100.0 million non-refundable upfront fee from
Janssen and during the year ended December 31, 2021, the Company received a $30.0 million milestone payment. The
Company allocated these amounts plus other variable consideration not subject to constraint to each identified
performance obligation using a combination of methods allowable under ASC 606. The Company applies the practical
expedient in Topic 606 and does not include disclosures regarding amounts for variable consideration allocated to
wholly-unsatisfied performance obligations or wholly-unsatisfied distinct goods that form part of a single performance
obligation, if any. This variable consideration includes expected reimbursement of research and development costs.
During the years ended December 31, 2022 and 2021, the Company recognized $15.9 million and $37.7 million,
respectively, of the deferred revenue – related party as license revenue.
The Company also recognized $73.3 million and $69.0 million during the years ended December 31, 2022 and 2021,
respectively, related to the reimbursement of research and development expenses.
As of December 31, 2022, the Company expects to recognize the remaining $42.6 million in deferred revenue
associated with the non-refundable upfront fee and milestone payment over the estimated research and development
period using the cost-to-cost input method over an estimated period of approximately 2.9 years.
A summary of the deferred revenue recognition is as follows (in thousands):
Deferred revenue at December 31, 2020
Milestone payment from Janssen
Deferred revenue recognized as license revenue during the year ended December 31, 2021
Effects of exchange rate changes
Deferred revenue at December 31, 2021
Deferred revenue recognized as license revenue during the year ended December 31, 2022
Effects of exchange rate changes
Deferred revenue at December 31, 2022
$
$
72,842
30,000
(37,701)
(275)
64,866
(15,920)
(6,387)
42,559
Debt Financing
On August 2, 2022 the Company, as borrower, and Meira UK II and Meira Ireland, as guarantors (the “Subsidiary
Guarantors”), entered into a senior secured financing arrangement (the “Financing Agreement”) by and among the
Company, the Subsidiary Guarantors, the lenders and other parties from time to time party thereto and Perceptive
Credit Holdings III, LP, as administrative agent and lender (“Perceptive”). On December 19, 2022, the Financing
Agreement was converted to a note purchase agreement (the “Note Purchase Agreement”) between the same parties
and under substantially the same terms and conditions as the Financing Agreement, subject to certain customary note
constitution terms. Perceptive Advisors, LLC, an affiliate of Perceptive, is a 15.6% holder of the ordinary shares of the
Company. Additionally, Ellen Hukkelhoven, Ph.D., a director of the Company, is an employee of Perceptive Advisors,
LLC. Refer to the discussion in Note 14 for further information related to the accounting for the debt financing.
Leases
ARE Vivarium Lease
Effective May 1, 2019, the Company entered into an operating lease for vivarium space with ARE East River Science
Park, LLC (“ARE”), which was subsequently amended to add additional space within the vivarium. ARE is under
common control of an entity that is a minority shareholder of the Company and whose executive chairman
F-32
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
and founder served as a director of the Company through June 2022. The initial lease had a term of twelve months
which automatically renews on an annual basis.
The rent expense under this operating lease was $0.15 million and $0.09 million for the years ended December 31,
2022 and 2021, respectively, which are included in loss from operations.
The Company made cash payments to ARE in connection with this operating lease in the amount of $0.14 million and
$0.09 million during the years ended December 31, 2022 and 2021, respectively.
There were no amounts due to ARE under this operating lease at December 31, 2022 and 2021.
As of December 31, 2022, the Company’s lease commitment is approximately $0.16 million.
13. Leases
The Company has commitments under operating leases for laboratory, warehouse, clinical trial sites and office space.
The Company also has finance leases for manufacturing space and office equipment. The Company’s leases have
initial lease terms ranging from 3 years to 191 years. Certain lease agreements contain provisions for future rent
increases. Payments due under the lease contracts include fixed payments.
Total rent expense recorded under these leases was $5.3 million and $5.0 million for the years ended December 31,
2022 and 2021, respectively.
As of December 31, 2022, the Company has short term lease commitments amounting to approximately $0.2 million
on a monthly basis for one lease for vivarium space that is on a one-year lease.
On August 4, 2020, Meira Ireland entered into two agreements (the “Agreements”) with Shannon Commercial
Enterprises DAC trading as Shannon Commercial Properties, to acquire two properties in the Shannon Free Zone in
Shannon, Ireland for an aggregate price of €18 million, or approximately $21.2 million. These properties will serve as
the Company’s second, large scale cGMP viral vector manufacturing facility and its first cGMP plasmid and DNA
production facility.
The closing for the first building occurred in August 2020 and the closing for the second building occurred in January
2021. The total cost of the first and second buildings, including taxes and legal fees, was €11.9 million and €7.5
million, or approximately $13.8 million and $8.9 million, respectively, and have been recorded as right of use assets in
the consolidated balance sheets as of December 31, 2021. There is no corresponding lease liability as the Company
paid the full cost on the date of the closings.
At the closings, Meira Ireland entered into a lease for each property providing for a long leasehold interest of
approximately 191 years.
The leases also include customary terms and conditions, with a nominal annual lease cost and annual maintenance fees
of approximately €0.3 million, or approximately $0.4 million, in the aggregate, which amount is subject to change
depending on the annual maintenance costs within the Shannon Free Zone development.
During the year ended December 31, 2022, the Company recognized three operating leases for locations in connection
with its clinical trials for its IRD product candidates and office and warehouse space, with initial lease terms between 3
years and 9 years. Payments due under the lease contracts include fixed payments. In conjunction with these operating
leases, the Company recognized initial operating lease right-of-use assets in the amount of $1.8 million and
corresponding lease liabilities in the amount of $1.8 million which are included in the right-of-use assets and lease
obligations in the consolidated balance sheets as of December 31, 2022.
F-33
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the year ended December 31, 2021, the Company recognized seven operating leases for locations in connection
with its clinical trials for its IRD product candidates with initial lease terms between 5 years and 6 years. Certain lease
agreements contain provisions for tenant allowances and future rent increases. Payments due under the lease contracts
include fixed payments. In conjunction with these operating leases, the Company recognized initial operating lease
right-of-use assets in the amount of $2.2 million and corresponding lease liabilities in the amount of $2.3 million
which are included in the right-of-use assets and lease obligations in the consolidated balance sheets as of December
31, 2021.
The components of lease cost for the years ended December 31, 2022 and 2021 are as follows (in thousands):
Finance lease cost
Amortization of right-of-use assets
Interest on lease liabilities
Total finance lease cost
Operating lease cost
Short-term lease cost
Total lease cost
2022
2021
$
$
1,103
1
1,104
5,307
154
6,565
$
$
1,227
2
1,229
5,002
751
6,982
Amounts reported in the consolidated balance sheets for leases where the Company is the lessee as of December 31,
2022 and 2021 were as follows (in thousands):
Operating leases
Right-of-use asset
Capitalized lease obligations
Finance leases
Right-of-use asset
Capitalized lease obligations
Weighted-average remaining lease term
Operating leases
Finance leases
Weighted-average discount rate
Operating leases
Finance leases
December 31,
2022
December 31,
2021
$
$
$
$
20,109
21,215
24,718
—
$
$
$
$
22,782
23,721
27,645
12
5.3 years
175.8 years
8.8 %
8.0 %
6.5 years
176.7 years
8.5 %
8.0 %
Other information related to leases as of the years ended December 31, 2022 and 2021 are as follows (in thousands):
Cash paid for amounts included in the measurement of
lease liabilities
Operating cash flows from finance leases
Operating cash flows from operating leases
Financing cash flows from finance leases
$
$
$
Right-of-use assets obtained in exchange for lease liabilities
$
Operating leases
$
Finance leases
2022
2021
52
5,384
$
$
— $
1,793
$
— $
16
4,969
2
4,424
—
F-34
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Future minimum lease payments under non-cancellable leases as of December 31, 2022 are as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Total undiscounted lease payments
Less: Imputed interest
Total lease liabilities
14. Debt Financing
$
Operating Leases
5,513
5,379
5,338
5,067
1,794
2,872
25,963
(4,748)
21,215
$
$
On August 2, 2022 the Company, and the Subsidiary Guarantors, entered into the Financing Agreement with
Perceptive. On December 19, 2022, the Financing Agreement was converted to a Note Purchase Agreement between
the same parties and under substantially the same terms and conditions as the Financing Agreement, subject to certain
customary note constitution terms.
The Note Purchase Agreement provides for an initial $75.0 million notes issuance (the “Tranche 1 Notes”), and the
Company may request an additional $25.0 million notes issuance to be made available at Perceptive’s sole discretion
before August 2, 2024 (the “Tranche 2 Notes”, together with the Tranche 1 Notes, the “Notes”). The Note Purchase
Agreement matures on August 2, 2026 and is interest-only during the term. The Company has the option to redeem
outstanding principal notes at any time along with an applicable early redemption fee. Outstanding amounts under the
Note Purchase Agreement bear interest at a fluctuating rate per annum equal to 10.00% plus the secured overnight
financing rate administered by the Federal Reserve Bank of New York for a one-month tenor, subject to a 1.00% floor.
The annual interest rate was 13.02% at December 31, 2022. As of December 31, 2022, the outstanding balance of the
Tranche 1 Notes was $75.0 million plus accrued interest of $4.0 million. During the year ended December 31, 2022,
the Company recorded interest expense of $4.0 million.
The Company’s obligations under the Note Purchase Agreement are secured by the Company’s London, UK and
Shannon, Ireland manufacturing facilities, $3.0 million of the Company’s cash and the bank accounts of the Subsidiary
Guarantors, and the issued and outstanding equity interests of the Subsidiary Guarantors.
The Note Purchase Agreement imposes covenants that include, among other things, enrolling in a Phase III trial for
AAV-RPGR on or before June 30, 2023, and ensuring the Company’s Shannon manufacturing facility meets or
satisfies all applicable good manufacturing practice requirements on or before December 31, 2023, as well as various
restrictions on the Company and the Subsidiary Guarantors, including restrictions pertaining to: (i) the incurrence of
additional indebtedness, (ii) limitations on liens, (iii) limitations on certain investments, (iv) making distributions,
dividends and other payments, (v) mergers, consolidations and acquisitions, (vi) dispositions of assets, (vii) the
Company’s maintenance of at least $3.0 million in a U.S. bank account, (viii) transactions with affiliates, (ix) changes
to governing documents, (x) changes to certain agreements and leases and (xi) changes in control; however, certain of
these restrictions contain exceptions which allow the Company to license, sell and monetize assets in its AAV-hAQP1
program in development to treat radiation-induced xerostomia, its AAV-GAD program in development to treat
Parkinson’s disease and its gene regulation platform technologies.
In connection with entering into the Financing Agreement, the Company granted warrants to Perceptive to purchase up
to (i) 400,000 ordinary shares of the Company at an exercise price of $15.00 per share and (ii) 300,000 ordinary
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
shares of the Company at an exercise price of $20.00 per share. The warrants are exercisable immediately and expire
on August 2, 2027. The Company recorded a debt discount of $2.3 million for the allocated fair value of the warrants.
The Company also capitalized certain lender and legal costs associated with the Note Purchase Agreement totaling
$2.2 million, which were recorded as a discount to the loan. The aggregate discount of $4.4 million is being amortized
to interest expense over the term of the Note Purchase Agreement. The Company amortized $0.4 million of the
discount to interest expense during the year ended December 31, 2022. At December 31, 2022, the remaining
unamortized discount was $4.0 million.
15. Commitments and Contingencies
There were no new material commitments or contingencies entered into during the year ended December 31, 2022.
16. Employee Benefit Plans
United States
On January 1, 2017, Meira LLC adopted a defined contribution retirement plan that complies with Section 401(k) of
the Internal Revenue Code. All Meira LLC employees over the age of 21 are eligible to participate in the plan after
three consecutive months of service. Employees are able to defer a portion of their pay into the plan on the first day of
the month or after the day all age and service requirements have been met. The plan provides for a Company matching
contribution. All eligible employees receive an employer matching contribution equal to the lesser of the amount the
employee contributes to the plan or 6% of their salary up to the annual IRS limit.
United Kingdom
On August 1, 2016, Meira UK II adopted a defined contribution group personal pension plan that complies with
HMRC for tax relief. All Meira UK II employees are eligible to participate in the plan upon joining the company and
providing the required services. All eligible employees, if they elect to join the pension scheme, receive an employer
pension contribution equal to 7.5% to 10.0% of their pensionable earnings. Currently, employees are required to
contribute 0.5%, to meet minimum legal pension funding levels of 8%, but may make optional contributions up to the
annual allowance HMRC limits.
Netherlands
Meira Netherlands operates a defined contribution pension. All of its employees participate in the plan. All eligible
employees receive an employer pension contribution and are also required to contribute.
Ireland
On November 20, 2020, MeiraGTx Ireland adopted a defined contribution pension plan. All MeiraGTx Ireland
employees are eligible to participate in the plan upon joining the Company. All eligible employees, if they elect to
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MEIRAGTX HOLDINGS PLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
join the pension scheme, receive an employer pension contribution. The Company’s current contribution, exclusive of
an employee match, is 4.5%, which exceeds Revenue Ireland requirements.
Belgium
Meira Belgium operates a defined contribution pension plan. All eligible employees receive an employer pension
contribution of 8% of their annual salary. Employees do not make contributions to the plan.
During the years ended December 31, 2022 and 2021, employer contributions to all plans were $2.0 million and $1.8
million, respectively.
F-37
Table of Contents
ITEM 9.
FINANCIAL DISCLOSURE
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
Not Applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource
constraints and that management is required to apply judgment in evaluating the benefits of possible controls and
procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief
Financial Officer (principal financial officer), evaluated, as of the end of the period covered by this Form 10-K, the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer
(principal executive officer) and Chief Financial Officer (principal financial officer) concluded that our disclosure controls
and procedures were effective at the reasonable assurance level at the end of the period covered by this Form 10-K.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as
defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed under the
supervision of our Chief Executive Officer and Chief Financial Officer, and affected by our board of directors,
management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of our financial statements for external reporting purposes in accordance with U.S. GAAP and includes policies
and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and directors and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures
may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022.
In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on its assessment and those
criteria, management has concluded that we maintained effective internal control over financial reporting as of December
31, 2022.
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Exemption from Attestation Report of the Registered Public Accounting Firm on Internal Control Over Financial
Reporting
This Form 10-K does not include an attestation report on our internal control over financial reporting from our
independent registered public accounting firm since we qualify as an “emerging growth company” as defined under the
JOBS Act.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-
15(f) under the Exchange Act) during the quarter ended December 31, 2022 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
Not applicable.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item is incorporated by reference to our definitive proxy statement for our 2023
annual shareholder meeting to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to our definitive proxy statement for our 2023
annual shareholder meeting to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022.
ITEM 12.
RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
Securities Authorized for Issuance Under Equity Compensation Plans (as of December 31, 2022)
The following table provides information as of December 31, 2022, regarding our ordinary shares that may be
issued under the MeiraGTx Holdings plc 2016 Equity Incentive Plan, as amended (the “2016 Plan”), the MeiraGTx
Holdings plc 2018 Incentive Award Plan (the “2018 Plan”) and the MeiraGTx Holdings plc 2018 Employee Stock
Purchase Plan (the “2018 ESPP”).
Plan category:
Equity compensation plans approved by shareholders
(a)
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants, and Rights
Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants, and
Rights
(b)
Number of Securities
Available for Future
Issuance Under Equity
Compensation Plans
(excludes securities
reflected in column(a))
(c)
2016 Plan(1)
2018 Plan (2) (3)
2018 ESPP (4)
Equity compensation plans not approved by
shareholders
Total
1,161,766
7,879,143
$
$
—
—
$
9,040,909
5.27
15.82
—
—
14.03
—
843,802
2,038,331
—
2,882,133
(1) In connection with our IPO, we assumed the 2016 Plan. As the 2016 Plan was previously approved by our
shareholders and, as we will not make future grants or awards under these plans, it is listed as “approved by
shareholders.” As such, the securities remaining available under the 2016 Plan have been excluded from the table
above.
(2) Pursuant to the terms of the 2018 Plan, the number of ordinary shares available for issuance under the 2018 Plan
automatically increases on each January 1, until and including January 1, 2028, by an amount equal to the lesser of:
(a) 4% of the aggregate number of ordinary shares outstanding on the final day of the immediately preceding
calendar year and (b) such smaller number of ordinary shares as is determined by our board of directors.
(3) The weighted average exercise price of outstanding awards does not take into account the shares issuable upon vesting
of outstanding restricted share units which have no exercise price. At December 31, 2022 there were a total of
2,182,500 shares subject to restricted share units included in the Number of Securities to be Issued Upon Exercise of
Outstanding Options, Warrants and Rights.
(4) Pursuant to the terms of the 2018 ESPP, the number of ordinary shares available for issuance under the 2018 ESPP
automatically increases on each January 1, until and including January 1, 2028, by an amount equal to the lesser of:
(a) 1% of the aggregate number of ordinary shares outstanding on the final day of the immediately preceding
calendar year and (b) such smaller number of ordinary shares as is determined by our board of directors, subject to the
limit set forth in the 2018 ESPP.
126
Table of Contents
Other
The remaining information required by this Item is incorporated by reference to our definitive proxy statement for
our 2023 annual shareholder meeting to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022.
ITEM 13.
INDEPENDENCE
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
The information required by this Item is incorporated by reference to our definitive proxy statement for our 2023
annual shareholder meeting to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item is incorporated by reference to our definitive proxy statement for our 2023
annual shareholder meeting to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022.
127
Table of Contents
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT INDEX
PART IV
Exhibit Number
Exhibit Description
Incorporated by Reference
Form File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
3.1
4.1
4.2
4.3
4.4
10.1#
10.2#
10.3#
10.4#
10.5
10.6
10.7#
10.8#
10.9#
10.10†
Amended and Restated Memorandum and
Articles of Association of the Registrant.
Specimen Share Certificate evidencing the
ordinary shares of the Registrant.
Shareholder Agreement.
Description of Securities.
Form of Warrant Agreement, dated August 2,
2022, issued by MeiraGTx Holdings plc to
certain warrant holders.
2016 Equity Incentive Plan, as amended, and
form of option agreements thereunder.
10-Q
001-38520
3.1
8/7/19
S-1
333-224914
10-K
001-38520
10-K
001-38520
4.1
4.2
4.3
5/29/18
3/11/20
3/11/20
10-Q
001-38520
4.1
11/10/22
S-1/A 333-224914
10.1
5/29/18
2018 Incentive Award Plan and forms of award
agreements thereunder.
S-1/A 333-224914
Non-Employee Director Compensation Program.
10-Q
001-38520
10.2
10.1
5/29/18
08/11/21
Form of Indemnification Agreement for Directors
and Officers.
S-1/A 333-224914
10.4
5/29/18
License and Sub-Lease Agreement, dated
May 31, 2019, between MeiraGTx LLC and
Imclone Systems, LLC.
Lease Agreement, effective February 2, 2016,
among MeiraGTx Limited, Moorfields Eye
Hospital NHS, Foundation Trust and Kadmon
Corporation LLC.
Employment Agreement, dated February 15,
2016, between MeiraGTx Limited and
Alexandria Forbes, Ph.D., as amended.
Employment Agreement, dated February 15,
2016 between MeiraGTx Limited and Richard
Giroux, as amended.
Employment Agreement, dated April 27, 2015,
between MeiraGTx Limited and Stuart Naylor,
Ph.D., as amended.
Agreement and Plan of Merger, dated
December 31, 2015, among MeiraGTx
Acquisition Corporation, BRI-Alzan, Inc., F-
Prime Inc., Gregory Petsko, Dagmar Ringe,
Brandeis University and MeiraGTx Limited.
10-Q
001-38520
10.2
8/7/19
S-1
333-224914
10.6
5/14/18
S-1/A 333-224914
10.7
5/29/18
S-1/A 333-224914
10.8
5/29/18
S-1/A 333-224914
10.9
5/29/18
S-1/A 333-224914
10.14
5/29/18
10.11#
2018 Employee Share Purchase Plan.
S-1/A 333-224914
10.15
5/29/18
128
Table of Contents
Exhibit Number
Exhibit Description
Incorporated by Reference
10.12#
10.13#
10.14#
10.15
10.16
10.17
10.18
10.19†
10. 20†
10. 21†
10. 22†
Form File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
10-K
001-38520
10.12
3/26/19
UK Sub-Plan Under the 2018 Incentive Award
Plan.
Form of Option Grant Notice and Option
Agreement Under the UK Sub-Plan to the 2018
Incentive Award Plan.
Form of Change in Control Agreement.
10-K
001-38520
10-K
001-38520
10.13
10.14
3/26/19
3/11/21
Lease agreement by and between Moorfields Eye
Hospital NHS Foundation Trust and MeiraGTx
UK II Limited, dated July 30, 2018.
Lease agreement by and between Moorfields Eye
Hospital NHS Foundation Trust and MeiraGTx
UK II Limited, dated July 30, 2018.
Transfer of Title, dated December 14, 2018, and
Lease, dated October 12, 2001, relating to the
Pharmacy Manufacturing Unit, Britannia Walk,
London, England.
Overage Deed, dated December 14, 2018,
between Moorfields Eye Hospital NHS
Foundation Trust and MeiraGTx UK II Limited
relating to the Pharmacy Manufacturing Unit,
Britannia Walk, London, England.
Consulting Agreement, dated October 5, 2018,
between MeiraGTx Holdings plc, Vector
Consulting LLC, Michael G. Kaplitt, Matthew
During, and Stephen B. Kaplitt.
License Agreement (RPE65), dated January 29,
2019, as amended and restated by and among
UCL Business PLC, MeiraGTx UK II Limited
and MeiraGTx Limited.
License Agreement (CNGB3), dated January 29,
2019, as amended and restated by and among
UCL Business PLC, MeiraGTx Holdings plc,
MeiraGTx UK II Limited and MeiraGTx
Limited.
License Agreement (CNGA3), dated January 29,
2019, as amended and restated by and among
UCL Business PLC, MeiraGTx UK II Limited
and MeiraGTx Limited.
129
10-Q
001-38520
10.4
8/8/18
10-Q
001-38520
10.5
8/8/18
8-K
001-38520
10.1
12/14/18
8-K
001-38520
10.2
12/14/18
10-K
001-38520
10.19
3/26/19
10-K
001-38520
10.20
3/26/19
10-K
001-38520
10.21
3/26/19
10-K
001-38520
10.22
3/26/19
Table of Contents
Exhibit Number
Exhibit Description
Incorporated by Reference
Form File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
10. 23†
10. 24†
10. 25†
10.26††
10. 27
10.28
10.29#
10.30#
10.31
10.32
License Agreement (RPGR), dated February 5,
2019, as amended and restated by and among
UCL Business PLC, MeiraGTx UK II Limited
and MeiraGTx Limited.
Amendment No. 4 to Exclusive License
Agreement, dated January 29, 2019, between
UCLB and MeiraGTx Limited.
Collaboration, Option and License Agreement,
dated January 30, 2019, by and among Janssen
Pharmaceuticals, Inc., MeiraGTx UK II Limited
and MeiraGTx Holdings plc.
First Amendment to Collaboration, Option and
License Agreement, dated December 16, 2021.
Registration Rights Agreement, dated
February 26, 2019, by and among MeiraGTx
Holdings plc and the investors named therein.
Agreement for Lease with Landlord’s
Refurbishment Works, dated May 29, 2019,
between MeiraGTx UK II Limited and Provost 1
Limited and Provost 2 Limited, including agreed
form of Lease between MeiraGTx UK II Limited
and Provost 1 Limited and Provost 2 Limited.
Form of Restricted Share Unit Grant Notice and
Restricted Share Unit Agreement Under the 2018
Incentive Award Plan.
Form of Restricted Share Unit Grant Notice and
Restricted Share Unit Agreement Under the UK
Sub-Plan to the 2018 Incentive Award Plan.
Particulars and Conditions of Sale of Building 2,
Block K, Shannon Free Zone, Shannon, County
Clare, Ireland, dated as of August 4, 2020, by and
between Shannon Commercial Enterprises DAC
trading as Shannon Commercial Properties and
MeiraGTx Ireland DAC, including agreed form
of Lease between Shannon Commercial
Enterprises DAC and MeiraGTx Ireland DAC.
Particulars and Conditions of Sale of Building 3,
Block K, Shannon Free Zone, Shannon, County
Clare, Ireland, dated as of August 4, 2020, by and
between Shannon Commercial Enterprises DAC
trading as Shannon Commercial Properties and
MeiraGTx Ireland DAC, including agreed form
of Lease between Shannon Commercial
Enterprises DAC and MeiraGTx Ireland DAC.
10-K
001-38520
10.23
3/26/19
10-K
001-38520
10.24
3/26/19
10-K
001-38520
10.25
3/26/19
10-K
001-3852
10.26
3/10/22
8-K
001-38520
10.2
2/26/19
10-Q
001-38520
10.3
8/7/19
10-K
001-38520
10.30
3/11/20
10-K
001-38520
10.31
3/11/20
10-Q
001-38520
10.1
11/5/20
10-Q
001-38520
10.2
11/5/20
10.33#
Deferred Compensation Plan for Non-Employee
Directors.
10-K
001-38520
10.35
3/10/22
130
Table of Contents
Exhibit Number
Exhibit Description
Incorporated by Reference
10.34#
10.35††
10.36
10.37††
10.38
10.39
10.40
21
23.1
31.1
31.2
32.1
Form of Restricted Share Unit Grant Notice and
Restricted Share Unit Agreement for Non-
Employee Directors Under the 2018 Incentive
Award Plan.
Credit Agreement and Guaranty, dated August 2,
2022, by and among MeiraGTx Holdings plc, as
borrower, MeiraGTx UK II Limited and
MeiraGTx Ireland DAC, as guarantors, the
lenders and other parties from time to time party
thereto and Perceptive Credit Holdings III, LP, as
administrative agent and lender.
Amendment No. 1 to Credit Agreement and
Guaranty, dated December 19, 2022, by and
among MeiraGTx Holdings plc, as borrower,
certain subsidiary guarantors and lenders party
thereto, and Perceptive Credit Holdings III, LP,
as administrative agent.
Amended and Restated Note Purchase
Agreement and Guaranty, dated December 19,
2022, by and among MeiraGTx Holdings plc, as
issuer, the subsidiary guarantors and noteholders
from time to time party thereto, and Perceptive
Credit Holdings III, LP, as administrative agent.
Tranche 1 Note, dated December 19, 2022, by
and among MeiraGTx Holdings plc, as issuer, the
subsidiaries guarantors and noteholders from
time to time party thereto, and Perceptive Credit
Holdings III, LP, as administrative agent.
Securities Purchase Agreement, dated November
9, 2022, by and among MeiraGTx Holdings plc
and Johnson & Johnson Innovation – JJDC, Inc.
Registration Rights Agreement, dated November
15, 2022, by and among MeiraGTx Holdings plc
and Johnson & Johnson Innovation – JJDC, Inc.
List of Subsidiaries.
Consent of Ernst & Young LLP.
Certification of Chief Executive Officer pursuant
to Rules 13a-14(a)/15d-14(a) under the Securities
Exchange Act of 1934, as amended.
Certification of Chief Financial Officer pursuant
to Rules 13a-14(a)/15d-14(a) under the Securities
Exchange Act of 1934, as amended.
Certification of Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
131
Form File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
10-K
001-38520
10.36
3/10/22
10-Q
001-38520
10.1
11/10/22
*
*
*
*
*
*
*
*
*
**
Table of Contents
Exhibit Number
Exhibit Description
Incorporated by Reference
Form File No.
Exhibit
Filing
Date
Filed/
Furnished
Herewith
32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Certification of Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Inline XBRL Instance Document.
Inline XBRL Taxonomy Extension Schema
Document.
Inline XBRL Taxonomy Extension Calculation
Linkbase Document.
Inline XBRL Taxonomy Definition Linkbase
Document.
Inline XBRL Taxonomy Label Linkbase
Document.
Inline XBRL Taxonomy Extension Presentation
Linkbase Document.
Cover Page Interactive Data File (formatted as
Inline XBRL and contained in Exhibit 101).
**
*
*
*
*
*
*
*
* Filed herewith
** Furnished herewith
# Management contract or compensation plan or arrangement
† Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment
pursuant to Rule 406 under the Securities Act of 1933, as amended
†† Portions of this exhibit (indicated by asterisks) have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K
Certain agreements filed as exhibits to this Form 10-K contain representations and warranties that the parties
thereto made to each other. These representations and warranties have been made solely for the benefit of the other parties
to such agreements and may have been qualified by certain information that has been disclosed to the other parties to such
agreements and that may not be reflected in such agreements. In addition, these representations and warranties may be
intended as a way of allocating risks among parties if the statements contained therein prove to be incorrect, rather than as
actual statements of fact. Accordingly, there can be no reliance on any such representations and warranties as
characterizations of the actual state of facts. Moreover, information concerning the subject matter of any such
representations and warranties may have changed since the date of such agreements.
ITEM 16.
FORM 10-K SUMMARY
None.
132
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
Date: March 14, 2023
MeiraGTx Holdings plc (Registrant)
By:
/s/ Alexandria Forbes
Alexandria Forbes
President and Chief Executive Officer and
Director (Principal Executive Officer)
133
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of Registrant and in the capacities and on the dates indicated.
Signature
Title
/s/ Alexandria Forbes, Ph.D.
President and Chief Executive Officer and Director
(Principal Executive Officer)
Alexandria Forbes, Ph.D.
/s/ Richard Giroux
Richard Giroux
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date
March 14, 2023
March 14, 2023
/s/ Keith R. Harris, Ph.D.
Chairman of the Board and Director
March 14, 2023
Keith R. Harris, Ph.D.
/s/ Ellen Hukkelhoven, Ph.D.
Director
Ellen Hukkelhoven, Ph.D.
/s/ Martin Indyk, Ph.D.
Director
Martin Indyk, Ph.D.
/s/ Arnold J. Levine, Ph.D.
Director
Arnold J. Levine, Ph.D.
/s/ Lord Mendoza
Director
Lord Mendoza
/s/ Nicole Seligman
Director
Nicole Seligman
/s/ Thomas E. Shenk, Ph.D.
Director
Thomas E. Shenk, Ph.D.
/s/ Debra Yu, M.D.
Director
Debra Yu, M.D.
134
March 14, 2023
March 14, 2023
March 14, 2023
March 14, 2023
March 14, 2023
March 14, 2023
March 14, 2023
Exhibit 10.36
AMENDMENT NO. 1 TO CREDIT AGREEMENT AND GUARANTY
This AMENDMENT NO. 1 TO CREDIT AGREEMENT AND GUARANTY, dated as of December 19,
2022 (this “Amendment”), is by and among MEIRAGTX HOLDINGS PLC, an exempted company with limited
liability incorporated under the laws of the Cayman Islands with registration number 336306 (the “Borrower”),
certain Subsidiaries of the Borrower party hereto (the “Subsidiary Guarantors”), the Lenders party hereto, and
PERCEPTIVE CREDIT HOLDINGS III, LP, as administrative agent for the Lenders (in such capacity, together
with its successors and assigns, the “Administrative Agent”).
WITNESSETH:
WHEREAS, the Borrower, the Subsidiary Guarantors, the lenders from time to time party thereto (the
“Lenders”) and the Administrative Agent are parties to that certain Credit Agreement and Guaranty, dated as of
August 2, 2022 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”). Capitalized terms used herein without definition shall have the same meanings as set forth in the
Credit Agreement as amended hereby; and
WHEREAS, subject to the terms and conditions set forth herein the Borrower, the Subsidiary Guarantors,
the Lenders and the Administrative Agent desire to amend and restate the Credit Agreement as provided herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
AMENDMENTS TO CREDIT AGREEMENT
SECTION 1.01. Amendments to the Credit Agreement. As of, and subject to the occurrence of, the
Restatement Effective Date (as defined below), the Credit Agreement is hereby amended and restated in its
entirety to read as set forth in Schedule 1 hereto (the Credit Agreement, as so amended and restated, the
“Amended and Restated Note Purchase Agreement”).
ARTICLE II
ACKNOWLEDGEMENT, AGREEMENT AND CONSENT AND
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Each Obligor confirms and agrees that, notwithstanding the effectiveness of this Amendment,
the Obligations of such Obligor under each Note Document to which such Obligor is a party shall not be impaired
and each Note Document to which such Obligor is a party is, and shall continue to be, in full force and effect and
is hereby confirmed and ratified in all respects, except that upon the Restatement Effective Date, the terms,
conditions, rights and remedies with respect to such Obligations of the Obligors shall be governed by the
Amended and Restated Note Purchase Agreement and the Note Documents as in effect on and after the
Restatement Effective Date. Each Obligor hereby consents to the modifications made to the Credit Agreement
pursuant to this Amendment and the Amended and Restated Note Purchase Agreement and hereby agrees that,
upon the occurrence of the Restatement Effective Date, and except as otherwise expressly set
forth herein or in the Amended and Restated Note Purchase Agreement, each Note Document to which it is a
party is and shall continue to be in full force and effect and the same are hereby ratified in all respects.
SECTION 2.02. Each Obligor hereby acknowledges and agrees that the Guaranteed Obligations will include all
Obligations under, and as defined in, the Amended and Restated Note Purchase Agreement. Each Obligor hereby
ratifies, confirms and reaffirms all terms and conditions of all security and other collateral granted to the
Administrative Agent, and confirms that the indebtedness secured thereby includes, without limitation, the
Obligations.
SECTION 2.03. To induce the Administrative Agent and the Lender party hereto to execute and deliver this
Amendment, each Obligor party hereto represents and warrants to the Administrative Agent and the Lender party
hereto that as of the date hereof, each of the following statements are true and correct:
(a)
The representations and warranties made by each Obligor party hereto herein, in the Amended and
Restated Note Purchase Agreement and each other Note Document are true and correct in all material respects as
if made on and as of such date (or in the case of any representation or warranty qualified by materiality, Material
Adverse Effect or similar qualification, true and correct in all respects) unless stated to relate solely to an earlier
date, in which case such representations or warranties shall be true and correct in all material respects as of such
earlier date.
(b)
The execution, delivery and performance of this Amendment by each Obligor party hereto, and the
resulting amendment and restatement of the Credit Agreement, have been duly authorized by all necessary
corporate or other organizational action on the part of such Obligor, and this Amendment and the Amended and
Restated Note Purchase Agreement each constitutes a legal, valid and binding agreement of such Obligor,
enforceable against such Obligor in accordance with its respective terms, except as enforcement may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the
enforcement of creditors’ rights generally; (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and (iii) solely in respect of the English
Guarantor and the Irish Subsidiary Guarantor, the Legal Reservations and the Perfection Requirements.
(c)
The execution, delivery and performance of this Amendment by any Obligor party hereto, and the
resulting amendment and restatement of the Credit Agreement, does not (i) violate or conflict with any Law, (ii)
result in the creation or imposition of any Lien (other than Permitted Liens) on any asset of such Obligor or any of
its Subsidiaries or (iii) violate, or result in a default under, any Material Agreement binding upon such Obligor or
any of its Subsidiaries that, in the case of clause (i) and (iii) above, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.
(d)
No authorization or approval or other action by, and no notice or filing with, any Governmental
Authority or any other Person (other than those that have been duly obtained or made and which are in full force
and effect) is required for the due execution, delivery and
2
performance by any Obligor party to this Amendment or the amendment and restatement of the Credit Agreement.
(e)
Immediately before and after giving effect to this Amendment, no event has occurred and is
continuing that constitutes an Event of Default.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions to Effectiveness of this Amendment. This Amendment shall become effective only
upon, and shall be subject to, the prior or simultaneous satisfaction or waiver of each of the following conditions
precedent in a manner reasonably satisfactory to the Administrative Agent (the date satisfaction of such conditions
being referred to as the “Restatement Effective Date”):
(a)
Counterparts. The Administrative Agent shall have received counterparts of (i) this Amendment,
and (ii) the Amended and Restated Note Purchase Agreement, in each case executed by each party thereto.
(b)
Notes Certificate. The Administrative Agent shall have received a Notes Certificate in respect of
the Tranche 1 Notes duly executed and delivered by the Borrower.
(c)
[Reserved]
(d)
Representations and Warranties. The statements, representations and warranties contained in
Section 2 above shall each be true and correct, both immediately before and after giving effect to this
Amendment, and the Administrative Agent shall have received a certificate executed by a Responsible Officer of
the Borrower, in form and substance reasonably satisfactory to the Administrative Agent, addressed to it and the
Lenders and certifying as to the foregoing.
(e)
Costs and Expenses, Etc. The Administrative Agent shall have received for its account and the
account of each Lender all reasonable and documented fees, costs and expenses due and payable to them pursuant
to Section 14.03 of the Amended and Restated Note Purchase Agreement and Section 4.09 (including, in each
case, the Administrative Agent’s and each Lender’s reasonable and documented legal fees and out-of-pocket
expenses) to the extent invoiced at least two (2) Business Days prior to the Restatement Effective Date.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Governing Law; Jurisdiction; Jury Trial. This Amendment and the rights and obligations of
the parties hereunder shall be governed by, and construed in accordance with the law of the State of New York,
without regard to principal of conflicts of law that would result in the application of the laws of any other
jurisdiction; provided that Section 5-1401 of the New York General Obligations Law shall apply. The jurisdiction
and waiver of jury trial provisions set forth in Sections 14.10 and 14.11 of the Amended and Restated Note
Purchase Agreement, respectively, are incorporated herein by reference mutatis mutandis.
3
SECTION 4.02. Effect of Amendment and Restatement.
(a)
On and after the Restatement Effective Date, each reference in any Note Document (other than this
Amendment) to (i) the “Credit Agreement” shall mean and be a reference to the Amended and Restated Note
Purchase Agreement and (ii) a “Loan Document” shall mean and be a reference to a Note Document as defined in
the Amended and Restated Note Purchase Agreement.
(b)
This Amendment shall constitute a Note Document for all purposes of the Amended and Restated
Note Purchase Agreement. Except as expressly amended hereby, and subject in all events to Section 2.01, the
Obligors party hereto agree that all of the representations, warranties, terms, covenants, conditions and other
provisions of the Credit Agreement and other Note Documents shall remain unchanged and shall continue to be,
and shall remain, in full force and effect in accordance with their respective terms. This Amendment is not and
shall not be deemed to be a waiver of any Default or Event of Default or non-compliance with any term or
condition contained in the Amended and Restated Note Purchase Agreement and the other Note Documents.
(c)
The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender
under any Note Document or applicable Law, nor constitute a waiver of any provision of the Amended and
Restated Note Purchase Agreement except as expressly set forth herein.
SECTION 4.03. No Novation. This Amendment is not intended by the parties to be, and shall not be construed to
be, a novation of the Credit Agreement or other Note Documents.
SECTION 4.04. Counterparts; Electronic Signatures. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto
may execute this Amendment by signing any such counterpart. Delivery of an executed signature page of this
Amendment by facsimile transmission or electronic transmission (in PDF format) shall be effective as delivery of
a manually executed counterpart hereof. Any signature (including, without limitation, (x) any electronic symbol or
process attached to, or associated with, a contract or other record and adopted by a person with the intent to sign,
authenticate or accept such contract or record and (y) any facsimile transmission or PDF format signature) hereto
or to any other certificate, agreement or document related to this transaction, and any contract formation or
record-keeping, in each case, through electronic means, shall have the same legal validity and enforceability as a
manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by
applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York
State Electronic Signatures and Records Act, or any similar state law based on the Uniform Electronic
Transactions Act, and the parties hereto hereby waive any objection to the contrary.
SECTION 4.05. Binding Nature. The provisions of this Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted assigns; provided that no Obligor may
assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the
Administrative Agent.
4
SECTION 4.06. Captions. The captions and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of any provision of this Amendment.
SECTION 4.07. Severability. If any provision hereof is found by a court to be invalid or unenforceable, to the
fullest extent permitted by any applicable Law the parties agree that such invalidity or unenforceability shall not
impair the validity or enforceability of any other provision hereof.
SECTION 4.08. Integration. This Amendment, together with the other Note Documents, constitutes the entire
agreement among the parties with respect to the subject matter hereof and supersedes any and all previous
agreements and understanding, oral or written, relating to the subject matter hereof.
SECTION 4.09. Costs and Expenses. Each Obligor party hereto agrees to pay or reimburse the Administrative
Agent and the Lenders for all of their reasonable and documented out-of-pocket costs of and in connection with
the negotiation, preparation, execution and delivery of this Amendment, including, without limitation, the
reasonable and documented fees and out-of-pocket fees and expenses of outside counsel for the Administrative
Agent and the Lenders.
SECTION 4.10.Waiver and Release.
(a)
EFFECTIVE AS OF THE DATE HEREOF, TO INDUCE THE ADMINISTRATIVE AGENT
AND THE LENDER PARTY HERETO TO AGREE TO THE TERMS OF THIS AMENDMENT, THE
BORROWER REPRESENTS AND WARRANTS THAT, AS OF THE DATE HEREOF, THERE ARE NO
CLAIMS OR OFFSETS AGAINST, OR RIGHTS OF RECOUPMENT WITH RESPECT TO, OR DISPUTES
OF, OR DEFENSES OR COUNTERCLAIMS TO, ITS OBLIGATIONS UNDER THIS AMENDMENT OR THE
OTHER NOTE DOCUMENTS, AND IN ACCORDANCE THEREWITH, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER:
(i) WAIVES ANY AND ALL SUCH CLAIMS, OFFSETS, RIGHTS OF RECOUPMENT,
DISPUTES, DEFENSES AND COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING
PRIOR TO THE DATE HEREOF; AND
(ii) FOREVER RELEASES, RELIEVES, AND DISCHARGES THE ADMINISTRATIVE
AGENT AND EACH LENDER AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, MEMBERS, PARTNERS, PREDECESSORS, SUCCESSORS, ASSIGNS,
ATTORNEYS, ACCOUNTANTS, AGENTS,
EMPLOYEES, AND REPRESENTATIVES
(COLLECTIVELY, THE “RELEASED PARTIES”), AND EACH OF THEM, FROM ANY AND ALL
CLAIMS, LIABILITIES, DEMANDS, CAUSES OF ACTION, DEBTS, OBLIGATIONS, PROMISES,
ACTS, AGREEMENTS, AND DAMAGES, OF WHATEVER KIND OR NATURE, WHETHER
KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, CONTINGENT OR FIXED,
LIQUIDATED OR UNLIQUIDATED, MATURED OR UNMATURED, WHETHER ARISING AT LAW
OR IN EQUITY, WHICH THE BORROWER EVER HAD, NOW HAVE, OR MAY, SHALL, OR CAN
HEREAFTER
5
HAVE, DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY BASED UPON,
CONNECTED WITH, OR RELATED TO MATTERS, THINGS, ACTS, CONDUCT, AND/OR
OMISSIONS AT ANY TIME FROM THE LATER OF THE CLOSING DATE OR THE DATE THAT
WAS NINETY (90) DAYS PRIOR TO THE DATE HEREOF THROUGH AND INCLUDING THE
DATE HEREOF, INCLUDING WITHOUT LIMITATION ANY AND ALL CLAIMS AGAINST THE
RELEASED PARTIES ARISING UNDER OR RELATED TO ANY OF THE NOTE DOCUMENTS OR
ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY.
(b)
IN CONNECTION WITH THE RELEASE CONTAINED HEREIN, THE BORROWER
ACKNOWLEDGES THAT IT IS AWARE THAT IT MAY HEREAFTER DISCOVER CLAIMS PRESENTLY
UNKNOWN OR UNSUSPECTED, OR FACTS IN ADDITION TO OR DIFFERENT FROM THOSE WHICH
IT KNOWS OR BELIEVES TO BE TRUE, WITH RESPECT TO THE MATTERS RELEASED HEREIN.
NEVERTHELESS, IT IS THE INTENTION OF THE BORROWER, THROUGH THIS AMENDMENT AND
WITH ADVICE OF COUNSEL, FULLY, FINALLY, AND FOREVER TO RELEASE ALL SUCH MATTERS,
AND ALL CLAIMS RELATED THERETO, WHICH DO NOW EXIST, OR HERETOFORE HAVE EXISTED.
IN FURTHERANCE OF SUCH INTENTION, THE RELEASES HEREIN GIVEN SHALL BE AND REMAIN
IN EFFECT AS A FULL AND COMPLETE RELEASE OF SUCH MATTERS NOTWITHSTANDING THE
DISCOVERY OR EXISTENCE OF ANY SUCH ADDITIONAL OR DIFFERENT CLAIMS OR FACTS
RELATED THERETO.
(c)
THE BORROWER COVENANTS AND AGREES NOT TO BRING ANY CLAIM, ACTION,
SUIT, OR PROCEEDING AGAINST THE RELEASED PARTIES, DIRECTLY OR INDIRECTLY,
REGARDING OR RELATED IN ANY MANNER TO THE MATTERS RELEASED HEREBY, AND
FURTHER COVENANTS AND AGREES THAT THIS AMENDMENT IS A BAR TO ANY SUCH CLAIM,
ACTION, SUIT, OR PROCEEDING.
(d)
THE BORROWER REPRESENTS AND WARRANTS TO THE RELEASED PARTIES THAT IT
HAS NOT HERETOFORE ASSIGNED OR TRANSFERRED, OR PURPORTED TO ASSIGN OR TRANSFER,
TO ANY PERSON OR ENTITY ANY CLAIMS OR OTHER MATTERS HEREIN RELEASED.
(e)
THE BORROWER ACKNOWLEDGES THAT
IT HAS HAD THE BENEFIT OF
INDEPENDENT LEGAL ADVICE WITH RESPECT TO THE ADVISABILITY OF ENTERING INTO THIS
RELEASE AND HEREBY KNOWINGLY, AND UPON SUCH ADVICE OF COUNSEL, WAIVE ANY AND
ALL APPLICABLE RIGHTS AND BENEFITS UNDER, AND PROTECTIONS OF, CALIFORNIA CIVIL
CODE SECTION 1542, AND ANY AND ALL STATUTES AND PRINCIPLES OF COMMON LAW THAT
HAVE SIMILAR EFFECT.
[Signature pages to follow]
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered as of the date hereof.
BORROWER:
MEIRAGTX HOLDINGS PLC
By /s/ Rich Giroux
Name: Rich Giroux
Title: CFO and COO
SUBSIDIARY GUARANTORS:
MEIRAGTX UK II LIMITED
By /s/ Rich Giroux
Name: Rich Giroux
Title: CFO and COO
MEIRAGTX IRELAND DAC
By /s/ Rich Giroux
Name: Rich Giroux
Title: CFO and COO
PERCEPTIVE CREDIT HOLDINGS III, LP, as
the Administrative Agent and Lender
By: PERCEPTIVE CREDIT OPPORTUNITIES GP,
LLC, its general partner
By /s/ Sandeep Dixit
Name: Sandeep Dixit
Title: Chief Credit Officer
By /s/ Sam Chawla
Name: Sam Chawla
Title: Portfolio Manager
Certain information marked as [***] has been excluded from this exhibit because it is both not material and is the
type that the registrant treats as private or confidential.
Exhibit 10.37
AMENDED AND RESTATED
NOTES PURCHASE AGREEMENT AND GUARANTY
dated as of August 2, 2022
as amended and restated as of December 19, 2022
by and among
MEIRAGTX HOLDINGS PLC,
as the Issuer
THE SUBSIDIARY GUARANTORS FROM TIME TO TIME PARTY HERETO
as the Subsidiary Guarantors
THE NOTEHOLDERS FROM TIME TO TIME PARTY HERETO,
as the Noteholders; and
PERCEPTIVE CREDIT HOLDINGS III, LP
as the Administrative Agent
U.S. $100,000,000
TABLE OF CONTENTS
SECTION 1 DEFINITIONS
1.01 Certain Defined Terms
1.02 Accounting Terms and Principles
1.03 Interpretation
1.04 Divisions
1.05 Reference Rate Replacement
1.06 Times of Day; Times of Performance
1.07 Rates
1.08 Miscellaneous.
SECTION 2 THE COMMITMENTS AND THE NOTES
2.01 Issuance of Notes
2.02 [Reserved]
2.03 Noteholder Representations.
2.04 Use of Proceeds
2.05 Constitution of the Notes
2.06 Signing and authenticating Notes Certificates
2.07 Status of Notes Certificate
2.08 Stocks of blank Notes Certificates
2.09 Delivery of replacements
2.10 Replacement Notes Certificates
2.11 Replacements to be numbered
2.12 Cancellation and destruction
2.13 Notification
2.14 Legend
SECTION 3 PAYMENTS, REDEMPTION AND INTEREST
3.01 Payments and Redemption Generally; Application
3.02 Interest
3.03 Early Redemption; Early Redemption Premium
3.04 Facility Fees
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39
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40
40
40
40
40
41
42
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TABLE OF CONTENTS
(continued)
SECTION 4 PAYMENTS, ETC.
4.01 Payments
4.02 Computations
4.03 Set-Off
SECTION 5 YIELD PROTECTION, ETC.
5.01 Additional Costs
5.02 Illegality
5.03 Taxes
SECTION 6 CONDITIONS PRECEDENT
6.01 Conditions to the issuance and subscription of the Tranche 1 Notes
6.02 Conditions to the issuance and sale of the Tranche 2 Notes
SECTION 7 REPRESENTATIONS AND WARRANTIES
7.01 Power and Authority
7.02 Authorization; Enforceability
7.03 Governmental and Other Approvals for Execution and Delivery of the Notes Document, etc.;
No Conflicts
7.04 Financial Statements; Material Adverse Change
7.05 Properties
7.06 No Actions or Proceedings
7.07 Compliance with Laws and Agreements
7.08 Taxes
7.09 Full Disclosure
7.10 Investment Company Act and Margin Stock Regulation
7.11 Solvency
7.12 Equity Holders, Subsidiaries and Other Investments
7.13 Continuing Secured Indebtedness
7.14 Material Agreements
7.15 Restrictive Agreements
7.16 Real Property
7.17 Pension Matters
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59
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60
60
61
61
64
65
65
65
66
66
66
66
66
66
67
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TABLE OF CONTENTS
(continued)
7.18 Priority of Obligations; Collateral; Security Interest
7.19 Governmental Approvals in Respect of Ordinary Course Activities, Etc.
7.20 Transactions with Affiliates
7.21 Sanctions
7.22 Anti-Corruption
7.23 Deposit and Disbursement Accounts and Investment Accounts
7.24 Centre of Main Interests
SECTION 8 AFFIRMATIVE COVENANTS
8.01 Financial Statements and Other Information
8.02 Notices of Material Events
8.03 Existence; Conduct of Business
8.04 Payment of Obligations
8.05 Insurance
8.06 Books and Records; Inspection Rights
8.07 Compliance with Laws and Material Agreements
8.08 Maintenance of Properties, Etc.
8.09 Governmental Approvals, Etc.
8.10 Action under Environmental Laws
8.11 Use of Proceeds
8.12 Certain Obligations Respecting Subsidiaries; Further Assurances
8.13 Termination of Non-Permitted Liens
8.14 Maintenance of the Governmental Approvals and Intellectual Property
8.15 ERISA and Foreign Pension Plan Compliance
8.16 Cash Management
8.17 Title, Headleases, Power to Remedy
8.18 Register of Mortgages and Charges
8.19 Post-Closing Covenants
8.20 Undertaking to list
SECTION 9 NEGATIVE COVENANTS
9.01 Indebtedness
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77
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TABLE OF CONTENTS
(continued)
9.02 Liens
9.03 Fundamental Changes, Acquisitions, Etc.
9.04 Lines of Business
9.05 Investments
9.06 Restricted Payments
9.07 Payments of Indebtedness
9.08 Change in Fiscal Year
9.09 Sales of Assets, Etc.
9.10 Transactions with Affiliates
9.11 Restrictive Agreements
9.12 Modifications of Organic Documents; Termination of Material Agreements
9.13 Sales and Leasebacks
9.14 Hazardous Material
9.15 Accounting Changes
9.16 Compliance with ERISA
9.17 [Reserved]
9.18 Sanctions; Anti-Corruption Use of Proceeds
9.19 Inbound and Outbound Licenses
9.20 Title, Headleases, Development
SECTION 10 FINANCIAL COVENANTS
10.01 Minimum Liquidity
10.02 Phase III Trial
10.03 Shannon Manufacturing Facility
SECTION 11 EVENTS OF DEFAULT
11.01 Events of Default
11.02 Remedies
11.03 Additional Remedies
SECTION 12 THE ADMINISTRATIVE AGENT
12.01 Appointment and Duties
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TABLE OF CONTENTS
(continued)
12.02 Binding Effect
12.03 Use of Discretion
12.04 Delegation of Rights and Duties
12.05 Reliance and Liability
12.06 Administrative Agent Individually
12.07 Noteholder Credit Decision
12.08 Expenses; Indemnities
12.09 Resignation of the Administrative Agent
12.10 Release of Collateral
12.11 Additional Secured Parties
SECTION 13 GUARANTEE
13.01 The Guarantee
13.02 Obligations Unconditional
13.03 Reinstatement
13.04 Subrogation
13.05 Remedies
13.06 Instrument for the Payment of Money
13.07 Continuing Guarantee
13.08 General Limitation on Guarantee Obligations
SECTION 14 MISCELLANEOUS
14.01 No Waiver
14.02 Notices
14.03 Expenses, Indemnification, Etc.
14.04 Amendments, Etc.
14.05 Successors and Assigns
14.06 Survival
14.07 Captions
14.08 Counterparts; Electronic Signatures
14.09 Governing Law
14.10 Jurisdiction, Service of Process and Venue
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104
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105
105
106
107
110
110
110
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TABLE OF CONTENTS
(continued)
14.11 Waiver of Jury Trial
14.12 Waiver of Immunity
14.13 Entire Agreement
14.14 Severability
14.15 No Fiduciary Relationship
14.16 Confidentiality
14.17 Interest Rate Limitation
14.18 Early Redemption Fee
14.19 Judgment Currency
14.20 USA PATRIOT Act
14.21 Acknowledgement and Consent to Bail-In of Affected Financial Institutions
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-vi-
SCHEDULES AND EXHIBITS
TABLE OF CONTENTS
(continued)
Schedule A
Schedule B
Schedule 1
Schedule 7.05(b)
Schedule 7.06(a)
Schedule 7.06(c)
Schedule 7.08
Schedule 7.12(a)
Schedule 7.12(b)
Schedule 7.13
Schedule 7.14
Schedule 7.15
Schedule 7.16
Schedule 7.20
Schedule 7.23
Schedule 9.02
Schedule 9.05
Schedule 9.12(b)
Schedule 9.13
Exhibit A
Exhibit B
Exhibit C
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I
Exhibit J
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-
-
-
-
Competitors
Specified Assets
Commitments
Intellectual Property
Certain Litigation
Labor Matters
Taxes
Subsidiaries of the Issuer
Other Equity Interests owned or held by the Issuer or its Subsidiaries
Existing Indebtedness of the Issuer and each of its Subsidiaries
-
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-
-
-
-
-
-
- Material Agreements of Obligors
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-
-
-
-
Restrictive Agreements
Real Property Owned or Leased by the Issuer or any Subsidiary
Transactions with Affiliates
Deposit, Disbursement and Investment Accounts
Closing Date Liens
Closing Date Investments
Excluded Agreements
Permitted Sales and Leasebacks
Form of Note
Form of Notes Subscription Request
Form of Guarantee Assumption Agreement
Form of Compliance Certificate
Form of Assignment and Assumption
Form of Information Certificate
Form of Intercompany Subordination Agreement
Form of Solvency Certificate
Form of Warrant Certificate
-vii-
AMENDED AND RESTATED NOTES PURCHASE AGREEMENT AND GUARANTY
AMENDED AND RESTATED NOTES PURCHASE AGREEMENT AND GUARANTY, dated as of
August 2, 2022, as amended and restated as of December 19, 2022 (this “Agreement”), by and among MeiraGTx
Holdings plc, an exempted company with limited liability incorporated under the laws of the Cayman Islands with
registration number 336306 (the “Issuer”), certain Subsidiaries of the Issuer required to provide Guarantees from
time to time hereunder, Perceptive Credit Holdings III, LP (the “Original Noteholder”) and each other noteholder
that may from time to time become a party hereto (each, together with their permitted successors and assigns, a
“Noteholder” and collectively, the “Noteholders”), and Perceptive Credit Holdings III, LP, as administrative agent
for the Noteholders (in such capacity, together with its permitted successors and assigns, the “Administrative
Agent”).
WITNESSETH:
WHEREAS, the Issuer has requested that the Noteholders provide a senior secured notes issuance facility
to the Issuer in an aggregate principal amount of $100,000,000, with (i) $75,000,000 in aggregate principal
amount of Notes made available on the Closing Date (the “Tranche 1 Notes”) and (ii) $25,000,000 in aggregate
principal amount of Notes (the “Tranche 2 Notes”) to be available after the Closing Date but prior to August 2,
2024 (the “Tranche 2 Notes Draw Period”), in each case subject to the terms and conditions set forth herein,
including the applicable terms and conditions set forth in Section 6 hereof and, with respect to the Tranche 2
Notes, at the sole discretion of the Majority Noteholders; and
WHEREAS, the Noteholders are willing, on the terms and subject to the conditions set forth herein, to
provide such senior secured notes issuance facility; and
WHEREAS this Agreement, prior to its amendment and restatement as of the Amendment and
Restatement Date, provided for the borrowing of certain loans, and loans (in the aggregate principal amount of
$75,000,000) were borrowed by the Issuer and, immediately following such amendment and restatement, remain
outstanding under this Agreement as the Tranche 1 Notes.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.01 Certain Defined Terms. As used herein (including the preamble and recitals), the following terms have
the following respective meanings:
“Account Pledge Agreement” means the Account Pledge Agreement, dated as of the date hereof, by and
between the Issuer and the Administrative Agent.
“Acquisition” means any transaction, or any series of related transactions, by which any Person directly or
indirectly, by means of an amalgamation, consolidation, merger, tender offer, purchase of Equity Interests or other
assets or properties, or similar transaction having the same effect as any of the foregoing, (i) acquires all or
substantially all of the assets of another Person including substantially all of a business line, business unit or
business division of any other Person,
(ii) acquires control of Equity Interests of another Person representing more than fifty percent (50%) of the
ordinary voting power (as determined on a fully-diluted, as-if-converted or exercised basis) for the election of
directors or other governing body if the business affairs of such Person are managed by a Board of directors, or
(iii) acquires control of more than fifty percent (50%) of the Equity Interests (as determined on a fully-diluted, as-
if-converted or exercised basis) of another Person engaged in any business that is not managed by a Board.
“Administrative Agent” has the meaning set forth in the preamble hereto.
“Affected Financial Institution” means (a) any EEA Financial Institution, or (b) any UK Financial
Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through
one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified;
provided that with respect to any Noteholder, an Affiliate of such Noteholder shall include, without limitation, all
of such Noteholder’s Related Funds so long as such entities are Controlled by such Noteholder.
“Agreement” has the meaning set forth in the preamble hereto.
“Amendment and Restatement Date” means December 19, 2022.
“Applicable Margin” means ten percent (10.00%), as such percentage may be increased pursuant to
Section 3.02(b).
“Asset Sale” has the meaning set forth in Section 9.09.
“Assignment and Assumption” means an assignment and assumption entered into by a Noteholder and an
assignee of such Noteholder in substantially the form of Exhibit F.
“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing,
notarisation, certificate or registration.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable
Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of
Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing
law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the
EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, Part I of the United Kingdom
Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United
Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or
their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bank Levy” means (i) any amount payable by any Recipient or any of its Affiliates on the basis of, or in
relation to, its balance sheet or capital base or any part of that person’s liabilities or minimum regulatory capital or
any combination thereof (including, without limitation, the UK
2
bank levy as set out in the Finance Act 2011) and any other levy or tax in any jurisdiction levied on a similar basis
or for a similar purpose, (ii) any financial activities taxes (or other taxes) of a kind contemplated in the European
Commission consultation paper on financial sector taxation dated 22 February 2011), and (iii) any bank surcharge
or banking corporation tax surcharge as set out in United Kingdom Finance (No. 2) Act 2015 and any other
surcharge or tax of a similar nature implemented in any other jurisdiction, in each case, as amended from time to
time.
“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy.”
“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of ERISA (whether governed
by the laws of the United States or otherwise) to which any Obligor or Subsidiary thereof incurs or otherwise has
any obligation or liability, contingent or otherwise.
“Board” means, with respect to any Person, the board of directors (or equivalent management or oversight
body) of such Person or any committee thereof duly authorized to act on behalf of such board or equivalent body.
“Business Day” means a day (other than a Saturday, Sunday or other day that is a legal holiday under the
laws of the State of New York, or under the laws of England) on which commercial banks are not authorized or
required by Law to close in New York, New York and in London, England; provided that if such day relates to any
document governed by the laws of Ireland or the performance of any obligations under the Notes Documents by
any Obligor incorporated under the laws of Ireland, the term “Business Day” shall exclude any day on which
commercial banks are authorized to close under the laws of, or are in fact closed in, Ireland.
“Capital Lease Obligations” means, as to any Person, the obligations of such Person to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person
under GAAP and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount
thereof without giving effect to any change in accounting for leases pursuant to GAAP, including, without
limitation, resulting from changes to (x) Accounting Standards Codification Topic 840, Leases, or the
implementation of (y) Accounting Standards Codification Topic 842, Leases).
“Casualty Event” means the damage, destruction or condemnation, as the case may be, of any property of
any Person.
“Certificate of Title” means a certificate of or report on title in respect of the London Manufacturing
Facility and Shannon Manufacturing Facility (as applicable) prepared by the Issuer’s solicitors and supplied to the
Administrative Agent in accordance with Section 8.17 dated as at the date of this Agreement.
“cGMP” means (i) the FDA’s current good manufacturing practice, (ii) any similar or functionally
equivalent guidelines or requirements applicable to, or required by, any non-U.S. jurisdiction or Governmental
Authority and (iii) all supplements, amendments, or regulatory filings related to any of the foregoing.
3
“Change of Control” means (i) any transaction, or any series of related transactions, by which any Person
directly or indirectly, by means of a tender offer, amalgamation, consolidation, merger, purchase of assets, or
similar transaction having the same effect as any of the foregoing, acquires ownership, directly or indirectly,
beneficially or of record, by any Person or group of Persons acting jointly or otherwise in concert of Equity
Interests of the Issuer having more than thirty-five percent (35%) of the aggregate ordinary voting power,
determined on a fully diluted, as-if converted or exercised, basis, (ii) the Issuer shall cease to own, directly or
indirectly, beneficially and of record, one hundred percent (100%) of the issued and outstanding Equity Interests
of each of the Subsidiary Guarantors or (iii) the sale of all or substantially all of the property of the business of the
Issuer and its Subsidiaries, taken as a whole.
“Change of Law” means any change after the date of this Agreement or, if later, after the date on which
the relevant Noteholder became a Noteholder under this Agreement (as applicable) in any law, regulation or
Treaty (or in the published interpretation, administration or application of any law, regulation or Treaty) or any
published practice or published concession of any relevant tax authority, other than any change that occurs
pursuant to, or in connection with, the adoption, ratification, approval or acceptance of, the Multilateral
Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting of 24
November 2016 in or by any jurisdiction.
“Claim” means any claim, demand, complaint, grievance, action, application, suit, cause of action, order,
charge, indictment, prosecution, final judgment or other similar process, assessment or reassessment, whether
made, converted or assessed in connection with a debt, liability, dispute, breach, failure or otherwise.
“Closing Date” means August 2, 2022.
“Code” means the U.S. Internal Revenue Code of 1986.
“Collateral” means any asset or property in which a Lien is purported to be granted under any Security
Documents.
“Commitment” means, with respect to each Noteholder the commitments in the amounts set forth opposite
such Noteholder’s name on Schedule 1 hereto, as such Schedule may be amended from time to time pursuant to
an Assignment and Assumption or otherwise; provided that with respect to the Tranche 1 Facility, the aggregate
Commitments of all Noteholders on the Closing Date was equal to $75,000,000.
“Commodity Account” means any commodity account, as such term is defined in Section 9-102 of the NY
UCC.
“Competitor” means any Person that is (i) listed as a competitor in the Issuer’s most recent public filings
made with the SEC as may be supplemented from time to time with the SEC or (ii) listed on Schedule A.
“Compliance Certificate” has the meaning set forth in Section 8.01(c).
4
“Conforming Changes” means, with respect to either the use or administration of One-Month Term
SOFR, any technical, administrative or operational changes (including changes to the definition of “Business
Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any
similar or analogous definition (or the addition of a concept of “interest period”), with respect to the timing and
frequency of determining rates and making payments of interest, the timing of subscription requests or
redemptions, conversion or continuation notices, the applicability and length of lookback periods, the applicability
of Section 3.02(e) and other technical, administrative or operational matters) that the Administrative Agent
reasonably decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the
use and administration thereof by the Administrative Agent in a manner substantially consistent with market
practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not
administratively feasible or if the Administrative Agent determines that no market practice for the administration
of any such rate exists, in such other manner of administration as the Administrative Agent decides is reasonably
necessary in connection with the administration of this Agreement and the other Notes Documents).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net
income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Contingent Acquisition Obligations” has the meaning set forth in clause (v) of the definition of
“Indebtedness”.
“Contract” means any contract, license, lease, agreement, obligation, promise, undertaking, understanding,
arrangement, document, commitment, entitlement, indenture, instrument, or engagement under which a Person
has, or will have, any liability or contingent liability (in each case, whether written or oral, express or implied, and
whether in respect of monetary or payment obligations, performance obligations or otherwise).
“Control” means, in respect of a particular Person, the possession, by one or more other Persons, directly
or indirectly, of the power to direct or cause the direction of the management or policies of such particular Person,
whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
(and similar derivatives) have meanings correlative thereto.
“Controlled Account” has the meaning set forth in Section 8.16(a).
“Copyright” means all copyrights, copyright registrations and applications for copyright registrations,
including all renewals and extensions thereof, all rights to recover for past, present or future infringements
thereof, and all other rights whatsoever accruing thereunder or pertaining thereto.
“Default” means any Event of Default and any event that, upon the giving of notice, the lapse of time or
both, would constitute an Event of Default.
“Default Rate” has the meaning set forth in Section 3.02(b).
5
“Deposit Account” means any deposit account, as such term is defined in Section 9-102 of the NY UCC.
“Designated Jurisdiction” means any country or territory that is itself the target of comprehensive
Sanctions (as of the date of this Agreement, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, the so-
called Donetsk People’s Republic, and the so-called Luhansk People’s Republic).
“Disqualified Equity Interests” means, with respect to any Person, any Equity Interest of such Person that,
by its terms (or by the terms of any security or other Equity Interest into which it is convertible or for which it is
exchangeable upon exercise or otherwise), or upon the happening of any event or condition (i) matures or is
mandatorily redeemable (other than solely for Qualified Equity Interests), including pursuant to a sinking fund
obligation or otherwise, (ii) is redeemable at the option of the holder thereof (other than solely for Qualified
Equity Interests), in whole or in part, (iii) provides for the scheduled payments of dividends or other distributions
in cash or other securities that would constitute Disqualified Equity Interests, or (iv) is or becomes convertible
into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity
Interests, in each case, prior to the date that is ninety-one (91) days after the scheduled Maturity Date; provided
that, if such Equity Interests are issued pursuant to any plan for the benefit of directors, officers, employees or
consultants of such Person or by any such plan to such directors, officers, employees or consultants, such Equity
Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased
by such Person upon the death, disability, retirement or termination of employment or service of such director,
officer, employee or consultant.
“Disqualified Institution” means (i) those Persons that are Competitors, (ii) those Persons separately
identified by name by the Issuer to the Administrative Agent in writing on or before the Closing Date, or (iii) in
the case of clauses (i) or (ii), any of their respective Affiliates (other than Affiliates that are bona fide debt funds
engaged in, or that advise funds or other investment vehicles that are engaged in, making, purchasing, holding or
otherwise investing in commercial loans, notes, bonds or similar extensions of credit or securities in the ordinary
course of its business except such funds that primarily invest in distressed debt or other distressed financial assets)
that are (x) clearly identifiable as Affiliates solely on the basis of their name (provided that the Administrative
Agent shall not have any obligation to carry out due diligence in order to identify such Affiliates) or (y) identified
by name by the Issuer to the Administrative Agent in writing from time to time; provided that the foregoing shall
not apply retroactively to disqualify any Person that previously acquired an assignment or participation interest to
the extent such Person was not a Disqualified Institution at the time of the applicable assignment or participation,
as the case may be.
“Dollars” and “$” means lawful money of the United States of America.
“Early Redemption Fee” means, with respect to any redemption of all or any portion of the outstanding
principal amount of the Notes on any Early Redemption Date, whether pursuant to clause (a) or (b) of Section
3.03 or otherwise, occurring (i) on or prior to the first anniversary of the Closing Date, an amount equal to the sum
of five percent (5.0%) of the aggregate outstanding principal amount of the Notes being prepaid; (ii) at any time
after the first anniversary of the
6
Closing Date and on or prior to the second anniversary of the Closing Date, an amount equal to four percent
(4.0%) of the aggregate outstanding principal amount of the Notes being redeemed; (iii) at any time after the
second anniversary of the Closing Date and on or prior to the third anniversary of the Closing Date, an amount
equal to one percent (1.0%) of the aggregate outstanding principal amount of the Notes being redeemed and (iv)
thereafter, zero percent (0%) of the aggregate outstanding principal amount of the Notes being redeemed.
“Early Redemption Date” has the meaning set forth in Section 3.03(a)(i).
“Early Redemption Price” has the meaning set forth in Section 3.0(a)(i).
“EEA Financial Institution” means (i) any credit institution or investment firm established in any EEA
Member Country which is subject to the supervision of an EEA Resolution Authority, (ii) any entity established in
an EEA Member Country which is a parent of an institution described in clause (i) of this definition, or (iii) any
financial institution established in an EEA Member Country which is a subsidiary of an institution described in
clauses (i) or (ii) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein,
and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with
public administrative authority of any EEA Member Country (including any delegee) having responsibility for the
resolution of any EEA Financial Institution.
“Eligible Transferee” means and includes (i) any commercial bank, (ii) any insurance company, (iii) any
finance company, (iv) any financial institution, (v) any investment fund that invests in loans, notes or other
obligations for borrowed money, (vi) with respect to any Noteholder, any of its Affiliates, and (vii) any other
“accredited investor” (as defined in Regulation D of the Securities Act) that is principally in the business of
managing investments or holding assets for investment purposes; provided that, in each case, “Eligible
Transferee” shall not include any Disqualified Institution.
“English Guarantor” means MeiraGTx UK II Limited incorporated in England and Wales with company
registration number 09348737.
“English Law Security Agreement” means the English law governed security agreement dated on or about
the date of this Agreement and made between the English Guarantor and the Irish Subsidiary Guarantor as chargor
and the Administrative Agent as security trustee.
“English Law Share Charge” means the English law governed share charge in respect of the shares
MeiraGTx Limited owns in the English Guarantor dated on or about the date of this Agreement and made between
the Issuer as chargor and the Administrative Agent as security trustee.
“English Obligor” means any Obligor incorporated in England and Wales.
7
“Environmental Law” means any Law or Governmental Approval relating to pollution or protection of
the environment or the treatment, storage, disposal, release, threatened release or handling of hazardous materials,
and all local laws and regulations, whether U.S. or non-U.S., related to environmental matters and any specific
agreements entered into with any competent authorities which include commitments related to environmental
matters.
“Equity Interests” means, with respect to any Person (for purposes of this defined term, an “issuer”), all
shares of, interests or participations in, or other equivalents in respect of such issuer’s capital stock, including all
membership interests, partnership interests or equivalent, and all debt or other securities (including warrants,
options and similar rights) directly or indirectly exchangeable, exercisable or otherwise convertible into, such
issuer’s capital stock, whether now outstanding or issued after the Closing Date, and in each case, however
classified or designated and whether voting or non-voting.
“Equivalent Amount” means, with respect to an amount denominated in a single currency, the amount in
another currency that could be purchased by the amount in the former currency determined by reference to the
Exchange Rate at the time of determination.
“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means, collectively, any Obligor, Subsidiary thereof, and any Person under common
control, or treated as a single employer, with any Obligor or Subsidiary thereof, within the meaning of Section
414(b), (c), (m) or (o) of the Code.
“ERISA Event” means (i) a reportable event as defined in Section 4043 of ERISA with respect to a Title
IV Plan, excluding, however, such events as to which the PBGC by regulation has waived the requirement of
Section 4043(a) of ERISA that it be notified within thirty (30) days of the occurrence of such event; (ii) a
withdrawal by any Obligor or any ERISA Affiliate thereof from a Title IV Plan or the termination of any Title IV
Plan resulting in liability under Sections 4063 or 4064 of ERISA; (iii) the withdrawal of any Obligor or any
ERISA Affiliate thereof in a complete or partial withdrawal (within the meaning of Section 4203 and 4205 of
ERISA) of any ERISA Affiliate from any Multiemployer Plan if there is any potential liability therefor, or the
receipt by any Obligor or any ERISA Affiliate thereof of notice from any Multiemployer Plan that it is insolvent
pursuant to Section 4245 of ERISA; (iv) the filing of a notice of intent to terminate, the treatment of a plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
PBGC to terminate a Title IV Plan or Multiemployer Plan; (v) the imposition of liability on any Obligor or any
ERISA Affiliate thereof pursuant to Sections 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (vi) the failure by any Obligor or any ERISA Affiliate thereof to make any required
contribution to a Plan, or the failure to meet the minimum funding standard of Section 412 of the Code with
respect to any Title IV Plan (whether or not waived in accordance with Section 412(c) of the Code) or the failure
to make by its due date a required installment under Section 430 of the Code with respect to any Title IV Plan or
the failure to make any required contribution to a Multiemployer Plan; (vii) the determination that any Title IV
Plan is considered an at-risk plan or a plan in endangered to critical status within the meaning of Sections 430,
431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; (viii) an event or condition which could
reasonably be
8
expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Title IV Plan or Multiemployer Plan; (ix) the imposition of any liability under Title I or
Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Obligor or any ERISA Affiliate thereof; (x) an application for a funding waiver under Section 303 of ERISA or an
extension of any amortization period pursuant to Section 412 of the Code with respect to any Title IV Plan; (xi)
the occurrence of a non-exempt prohibited transaction under Sections 406 or 407 of ERISA for which any Obligor
or any Subsidiary thereof may be directly or indirectly materially liable; (xii) receipt from the IRS of notice of the
failure of any Qualified Plan to qualify under Section 401(a) of the Code, or the failure of any trust forming part
of any Qualified Plan to fail to qualify for exemption from taxation under Section 501(a) of the Code; (xiii) the
imposition of any Lien (or the fulfillment of the conditions for the imposition of any Lien) on any of the rights,
properties or assets of any Obligor or any ERISA Affiliate thereof, in either case pursuant to Title I or Title IV of
ERISA, including Section 302(f) or 303(k) of ERISA or to Section 401(a)(29) or 430(k) of the Code; or (xiv) any
Foreign Benefit Event.
“ERISA Funding Rules” means the rules regarding minimum required contributions (including any
installment payment thereof) to Title IV Plans, as set forth in Sections 412, 430, 431, 432 and 436 of the Code and
Sections 302, 303, 304 and 305 of ERISA.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan
Market Association (or any successor Person), as in effect from time to time.
“Euros” or “€” means the single currency of the member states of the European Union that have the euro
as their lawful currency in accordance with legislation of the European Union relating to the Economic and
Monetary Union.
“Event of Default” has the meaning set forth in Section 11.01.
“Exchange Rate” means, as of any date of determination, the rate at which any currency may be
exchanged into another currency, as set forth on the relevant Reuters screen at or about 11:00 a.m. (New York City
time) on such date. In the event that such rate does not appear on the Reuters screen, the “Exchange Rate” shall
be determined by reference to such other publicly available service for displaying exchange rates as may be
reasonably agreed upon by the Issuer and the Administrative Agent (each acting in good faith) or, in the absence
of such agreement within two (2) Business Days, such Exchange Rate shall instead be reasonably designated by
the Administrative Agent.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required
to be withheld or deducted from a payment to a Recipient: (i) Taxes imposed on or measured by net income
(however denominated), franchise Taxes and branch profits Taxes, in each case, (x) imposed as a result of such
Recipient being organized under the laws of, or having its principal office or, in the case of any Noteholder, its
applicable booking office located in, the jurisdiction imposing such Tax (or any political subdivisions thereof) or
(y) that are Other Connection Taxes, (ii) any withholding Taxes imposed under FATCA, or (iii) any UK Tax
Deduction that qualifies as a UK Excluded Tax, provided that once the Notes are listed on a
9
Recognised Stock Exchange pursuant to Section 3.02(f), no UK Tax Deduction shall be treated as a UK Excluded
Tax.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Exclusive License” means any outbound license of Intellectual Property that is exclusive (whether as to
use, field, geography or otherwise) and (i) has a term that is longer than twelve (12) months from the date of the
original effective date of such license or (ii) is not subject to any automatic renewal right or obligation by the
parties thereto.
“Facility” means, as the context may require, any of the Tranche 1 Facility or the Tranche 2 Facility, and
“Facilities” means, collectively, any combination of the foregoing, as the case may be.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any
amended or successor version that is substantively comparable and not materially more onerous to comply with),
any current or future regulations or official interpretations thereof, any agreements entered into pursuant to
Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any
intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such
Sections of the Code.
“FD&C Act” means the U.S. Food, Drug and Cosmetic Act of 1938 (21 U.S.C. §§ 301), as amended from
time to time, and the regulations promulgated thereunder.
“FDA” means the U.S. Food and Drug Administration and any successor entity.
“Federal Funds Effective Rate” means, for any day, the greater of (i) the rate calculated by the Federal
Reserve Bank of New York based on such day’s federal funds transactions by depositary institutions (as
determined in such manner as the Federal Reserve Bank of New York sets forth on its public website from time to
time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal
funds effective rate and (ii) zero percent (0%).
“Foreign Benefit Event” means, with respect to any Foreign Pension Plan, (a) the existence of unfunded
liabilities in excess of the amount permitted under any material applicable Law, or in excess of the amount that
would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required
contributions or payments, under any material applicable Law, on or before the due date for such contributions or
payments, (c) the receipt of a written notice by a Governmental Authority relating to the termination of any such
Foreign Pension Plan or to appoint a trustee or similar official to administer any such Foreign Pension Plan, or
alleging the insolvency of any such Foreign Pension Plan, (d) the incurrence of any liability the Issuer or any of its
Subsidiaries under applicable Law on account of the complete or partial termination of such Foreign Pension Plan
or the complete or partial withdrawal of any participating employer therein, or (e) the occurrence of any
transaction that is prohibited under any applicable Law and that could reasonably be expected to result in the
incurrence of any liability by the Issuer or any of its Subsidiaries, or the imposition on the Issuer or any of its
Subsidiaries of any fine, excise tax or penalty resulting from any noncompliance with any applicable Law.
10
“Foreign Collateral Security Documents” means (i) the English Law Security Agreement, (ii) the English
Law Share Charge, (iii) the Irish Security Agreement, (iv) the Irish Share Charge, and (v) any other document
evidencing or creating a Lien over any asset to secure any obligation of any Obligor to the Secured Parties under
the Notes Documents.
“Foreign Pension Plan” means any benefit plan that under applicable Law, other than the Laws of the
United States or any political subdivision thereof, is required to be funded through a trust or other funding vehicle
other than a trust or funding vehicle maintained exclusively by a Governmental Authority.
“Foreign Real Property Security Document” means any Contract evidencing or creating a Lien over any
Manufacturing Facility entered into in accordance with Section 8.17.
“GAAP” means generally accepted accounting principles in the United States, as in effect from time to
time, set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants, in the statements and pronouncements of the Financial Accounting Standards
Board and in such other statements by such other entity as may be in general use by significant segments of the
accounting profession that are applicable to the circumstances as of the date of determination. Unless otherwise
mutually agreed upon by the Issuer and the Administrative Agent pursuant to Section 1.02(b), all references to
“GAAP” used herein shall be to GAAP applied consistently with the principles used in the preparation of the
financial statements delivered pursuant to Section 6.01(e)(i).
“Governmental Approval” means any consent, authorization, approval, order, license, franchise, permit
(including any Healthcare Permit), certification, accreditation, registration, clearance, exemption, filing or notice
that is issued or granted by or from (or pursuant to any act of) any Governmental Authority pursuant to or in
connection with any Law (including any Healthcare Law).
including without
“Governmental Authority” means any nation, government, branch of power (whether executive,
legislative or judicial), state, province or municipality or other political subdivision thereof and any entity
exercising executive, legislative, judicial, monetary, regulatory or administrative functions of or pertaining to
government,
limitation regulatory authorities, governmental departments, agencies,
commissions, bureaus, officials, ministers, courts, bodies, boards, tribunals and dispute settlement panels, and
other law-, rule- or regulation-making organizations or entities of any state, territory, county, city or other political
subdivision of any country, in each case whether U.S. or non-U.S., including the FDA and any other agency,
branch or other governmental body that has regulatory, supervisory or administrative authority or oversight over,
or is charged with the responsibility or vested with the authority to administer or enforce, any Healthcare Laws or
issue or approve any Healthcare Permits under or in connection with any such Healthcare Laws.
“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the
guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary
obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including
any obligation of the guarantor, direct or indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such
11
Indebtedness or other monetary obligation or to purchase (or to advance or supply funds for the purchase of) any
security for the payment thereof, (ii) to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other monetary obligation of the payment thereof, (iii) to maintain
working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness or other monetary obligation or (iv) as an account party in
respect of any letter of credit or letter of guaranty issued to support such Indebtedness or monetary obligation;
provided, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course
of business.
“Guarantee Assumption Agreement” means a Guarantee Assumption Agreement substantially in the form
of Exhibit C, executed by any entity that, pursuant to Section 8.12 is required to become a “Subsidiary
Guarantor”.
“Guaranteed Obligations” has the meaning set forth in Section 13.01.
“Hazardous Material” means any substance, element, chemical, compound, product, solid, gas, liquid,
waste, by-product, pollutant, contaminant or material which is hazardous or toxic, and includes, without
limitation, (i) asbestos, polychlorinated biphenyls and petroleum (including crude oil or any fraction thereof) and
(ii) any material classified or regulated as “hazardous” or “toxic” or words of like import pursuant to an
Environmental Law.
“Headlease” means a lease under which an Obligor holds title to all or any part of a Manufacturing
Facility.
“Healthcare Laws” means all applicable healthcare Laws, whether U.S. or non-U.S., the federal Anti-
kickback Statute (42 U.S.C. § 1320a-7b(b)) (the “Federal Anti-Kickback Statute”), the Physician Payments
Sunshine Act (42 U.S.C. § 1320a-7h), the civil False Claims Act (31 U.S.C. §§ 3729 et seq.), the criminal False
Claims Act (42 U.S.C. § 1320a-7b(a)), all criminal laws relating to health care fraud and abuse, including but not
limited to 18 U.S.C. Sections 286, 287, 1035, 1347 and 1349, the exclusion law (42 U.S.C. § 1320a-7), the civil
monetary penalties law (42 U.S.C. § 1320a-7a), Health Insurance Portability and Accountability Act of 1996 (42
U.S.C. §§ 1320d et seq.), as amended by the Health Information Technology for Economic and Clinical Health
Act (42 U.S.C. §§ 17921 et seq.), the FD&C Act, the statutes, regulations and binding directives of applicable
federal healthcare programs, including but not limited to Medicare (Title XVIII of the Social Security Act) and
Medicaid (Title XIX of the Social Security Act), any rules and regulations promulgated pursuant to the statutes
listed herein and any and all comparable U.S. and non-U.S. Laws and other applicable healthcare laws and
regulations.
“Healthcare Permit” means, with respect to any Person and with respect to its ordinary course business or
commercial activities (including the commercialization and development of its products), any Governmental
Approval (i) issued or required under any Healthcare Laws applicable to such activities of such Person, or (ii)
issued to such Person or required to be held by such Person under any Healthcare Laws with respect to its
ordinary course business or commercial activities (including the commercialization and development of its
products).
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“Hedging Agreement” means any interest rate exchange agreement, foreign currency exchange
agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price
hedging arrangement. For the avoidance of doubt, no Permitted Bond Hedge Transaction or Permitted Warrant
Transaction shall constitute Hedging Agreements.
“HMRC” means HM Revenue & Customs.
“IDA Grant” means the transactions and grant awarded by the Industrial Development Agency (Ireland) to
the Irish Subsidiary Guarantor pursuant to the IDA Grant Agreement.
“IDA Grant Agreement” means the IDA Grant Agreement, dated as of August 27, 2021, by and between
the Industrial Development Agency (Ireland) and the Irish Subsidiary Guarantor, as amended, restated,
supplemented or otherwise modified from time to time.
“Immaterial Subsidiary” means, as of any date of determination, any Subsidiary of an Obligor (i) the
unconsolidated assets of which does not exceed 5.0% of the consolidated assets of the Issuer and its consolidated
Subsidiaries as set forth in the financial statements most recently delivered pursuant to Sections 6.01, 8.01(a) or
8.01(b), as applicable, and (ii) the unconsolidated revenues of which does not exceed 5.0% of the consolidated
revenues of the Issuer and its consolidated Subsidiaries as set forth in the financial statements most recently
delivered pursuant to Sections 6.01, 8.01(a) or 8.01(b), as applicable; provided that no Subsidiary of the Obligors
shall qualify as an Immaterial Subsidiary if the assets or revenue of such Subsidiary taken together with the
consolidated assets or revenue of all then existing Immaterial Subsidiaries exceeds 10.0% of the consolidated
assets or revenue, as applicable, of the Issuer and its consolidated Subsidiaries.
“Impermissible Specified Assets Exclusive License” means any outbound license (or similar transaction
or arrangement) of any Specified Asset, in whole or in part, to a Person that is not an Affiliate that (i) qualifies as
an Exclusive License, and (ii) is not terminable by its terms (or automatically terminates) or by the licensor within
twenty (20) years from either (x) the original date of such outbound license or (y) if the term of such outbound
license is extended and so long as such extension does not result from an automatic renewal right or equivalent,
the date of such extension.
“Indebtedness” of any Person means, without duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds, debentures, notes, loan agreements, or similar
instruments, (iii) all obligations of such Person upon which interest charges are customarily paid (excluding trade
account payables), (iv) all obligations of such Person under conditional sale or other title retention agreements
relating to property acquired by such Person, (v) all obligations of such Person in respect of the deferred purchase
price of property or services ((A) excluding accounts payable incurred in the ordinary course of business, but (B)
including earn-out payments, purchase price adjustments and similar contingent payment obligations relating to
any Acquisition (such obligations arising pursuant to clause (B), collectively, “Contingent Acquisition
Obligations”)), (vi) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person,
whether or not the Indebtedness secured thereby has been assumed, (vii) all Guarantees by such Person of
Indebtedness of others, (viii) all Capital Lease Obligations of such Person, (ix) all obligations,
13
contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty,
(x) obligations under any Hedging Agreement, currency swaps, forwards, futures or derivatives transactions, (xi)
all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, (xii) all obligations of
such Person under license or other agreements containing a guaranteed minimum payment or purchase by such
Person other than operating leases entered into in the ordinary course of business and any such license or other
agreement for the purchase of goods, software and other intangibles, services or supplies in the ordinary course of
business, (xiii) any Disqualified Equity Interests of such Person, and (xiv) all other obligations required to be
classified as indebtedness of such Person under GAAP, excluding any of the foregoing to the extent comprised of
an obligation in respect of a trade payable, a commercial letter of credit supporting one or more trade payables or
similar obligations to a trade creditor, in each case in the ordinary course of business. The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a
general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor. Notwithstanding the foregoing, no Permitted Bond Hedge Transaction or Permitted Warrant
Transaction shall constitute Indebtedness.
“Indemnified Party” has the meaning set forth in Section 14.03(b).
“Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any
payment made by or on account of any Obligation, (ii) to the extent not otherwise described in clause (i), Other
Taxes or (iii) any UK Tax Deduction in respect of a payment made by a Withholding Agent under a Notes
Document to Perceptive Credit Holdings III, LP.
“Independent Appraiser” has the meaning set forth in Section 6.01(p).
“Information Certificate” means an Information and Collateral Certificate, in substantially the form set
forth in Exhibit G.
“Insolvency Proceeding” means (i) any case, action or proceeding before any court or other Governmental
Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, examinership, dissolution,
winding-up or relief of debtors, or (ii) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of any Person’s creditors generally or
any substantial portion of such Person’s creditors, in each case undertaken under U.S. federal, state or foreign
Law, including the Bankruptcy Code, or similar laws of Ireland or other applicable jurisdictions from time to time.
“Intellectual Property” means all Patents, Trademarks, Copyrights, and Technical Information, whether
registered or not, U.S. or non-U.S., including (without limitation) all of the following:
(i)
Property;
applications, registrations, amendments and extensions relating to such Intellectual
(ii)
rights and privileges arising under any applicable Laws with respect to such Intellectual
Property;
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(iii)
rights to sue for or collect any damages for any past, present or future infringements of such
Intellectual Property; and
(iv)
rights of the same or similar effect or nature in any jurisdiction corresponding to such
Intellectual Property throughout the world.
“Intercompany Subordination Agreement” means a subordination agreement to be executed and
delivered by the Issuer and each of its Subsidiaries, pursuant to which all obligations in respect of any
Indebtedness owing to any such Person by the Issuer or any of its Subsidiaries shall be subordinated to the prior
payment in full in cash of all Obligations, such agreement to be substantially in the form attached hereto as
Exhibit H.
“Interest Period” means (i) initially, the period commencing on (and including) the Closing Date and
ending on (and including) the last day of the calendar quarter in which the Closing Date occurred, and (ii)
thereafter, the period beginning on (and including) the first day of each succeeding calendar quarter and ending on
the earlier of (and including) (x) the last day of such calendar quarter and (y) the Maturity Date.
“Interest Rate” means, for any Interest Period, the sum of (i) the Applicable Margin plus (ii) the greater of
(x) the Reference Rate as of the second Business Day immediately preceding the first day of such Interest Period
and (y) one percent (1.00%).
“Invention” means any novel, inventive or useful art, apparatus, method, process, machine (including any
article or device), manufacture or composition of matter, or any novel, inventive and useful improvement in any
art, method, process, machine (including article or device), manufacture or composition of matter.
“Investment” means, for any Person: (i) the acquisition (whether for cash, property, services or securities
or otherwise) of Equity Interests, bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition (including any “short sale” or any
sale of any securities at a time when such securities are not owned by the Person entering into such sale); (ii) the
making of any deposit with, or advance, loan, assumption of debt, or other extension of credit to, or capital
contribution in any other Person (including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to such Person), but excluding any
such advance, loan or extension of credit having a term not exceeding one hundred eighty (180) days arising in
connection with the sale of inventory, services or supplies by such Person in the ordinary course of business; (iii)
the entering into of any Guarantee of, or other contingent obligation with respect to, Indebtedness or other liability
of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such
Person; or (iv) the entering into of any Hedging Agreement. The amount of an Investment will be determined at
the time the Investment is made without giving effect to any subsequent changes in value.
“Irish Companies Act” means the Companies Act of Ireland, 2014 (as amended).
“Irish Security Agreement” means the Irish law debenture to be executed and delivered by the Irish
Subsidiary Guarantor and the Administrative Agent, as amended, restated, amended and restated, supplemented or
otherwise modified from time to time.
15
“Irish Share Charge” means an Irish law share charge over the shares of MeiraGTx Ireland DAC, to be
executed and delivered by MeiraGTx Limited and the Administrative Agent, as amended, restated, amended and
restated, supplemented or otherwise modified from time to time.
“Irish Subsidiary Guarantor” means MeiraGTx Ireland DAC, a designated activity company limited by
shares incorporated in Ireland under registration number 672472 and with its registered address at 25-28 North
Wall Quay, Dublin 1, D01 H104 and any other company incorporated in Ireland who accedes to this Agreement as
a Subsidiary Guarantor from time to time.
“IRS” means the U.S. Internal Revenue Service.
“Issuer” has the meaning set forth in the preamble hereto.
“Issuer DTTP Filing” means a HMRC Form DTTP2 duly completed and filed by the Issuer, which:
(a) where it relates to a UK Treaty Noteholder (or a Noteholder which would be a UK Treaty Noteholder
upon the completion of any necessary procedural formalities) that is a party hereto as at the date of this
Agreement, contains the UK DTTP Scheme reference number and jurisdiction of tax residence stated opposite
that Noteholder’s name in Schedule 1 (Commitments), and is filed with HMRC within 30 days of the date of this
Agreement; or
(b) where it relates to a UK Treaty Noteholder (or a Noteholder which would be a UK Treaty Noteholder
upon the completion of any necessary procedural formalities) that becomes a party hereto after the date of this
Agreement, contains the UK DTTP Scheme reference number and jurisdiction of tax residence stated in respect of
that Noteholder in the relevant documentation which it executes on becoming a party hereto, and is filed with
HMRC within 30 days of that date.
“Janssen Collaboration Agreement” means that certain Collaboration, Option and License Agreement,
dated January 30, 2019, by and between Janssen Pharmaceuticals, Inc. and Issuer, as may be amended, restated,
supplemented or otherwise modified from time to time.
“Law” means any U.S. or non-U.S. federal, state, provincial, territorial, municipal or local statute, treaty,
rule, regulation, ordinance, code or administrative or judicial precedent or authority, including any interpretation
or administration thereof by any Governmental Authority charged with the enforcement, interpretation or
administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations
and permits of, and agreements with, any Governmental Authority, in each case having the force of law.
“Legal Reservations” means, solely in respect of the English Guarantor and the Irish Subsidiary
Guarantor, (i) the principle that equitable or discretionary remedies may be granted or refused at the discretion of
a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally
affecting the rights of creditors; (ii) the time barring of claims under the UK Limitation Acts or the Statute of
Limitations 1957 (Ireland) (as applicable), the possibility that an undertaking to assume liability for or indemnify
a person against non-payment of stamp duty may be void and defences of set-off or counterclaim; (iii) the
limitation of the enforcement of the terms of leases of real property by laws of general application to those
16
leases; (iv) similar principles, rights and remedies under the laws of any Relevant Jurisdiction; and (v) any other
matters which are set out as qualifications or reservations as to matters of law of general application in any legal
opinions supplied to the Noteholders under this Agreement.
“Lien” means any mortgage, lien, pledge, charge, assignment by way of security or other security interest,
or any lease, title retention agreement, mortgage, restriction, easement, right-of-way, option or adverse claim (of
ownership or possession) or other encumbrance of any kind or character whatsoever or any preferential
arrangement that has the practical effect of creating a security interest.
“London Manufacturing Facility” means the leasehold interest held by the UK Subsidiary Guarantor with
Land Registry title number EGL434767 and known as Pharmacy Manufacturing Unit, Britannia Walk, London
(N1 7LU) and located at 92 Britannia Walk, London, United Kingdom.
“Loss” means judgments, debts, liabilities, expenses, costs, damages or losses, contingent or otherwise,
whether liquidated or unliquidated, matured or unmatured, disputed or undisputed, contractual, legal or equitable,
including loss of value, professional fees, including fees and disbursements of legal counsel on a full indemnity
basis, and all costs incurred in investigating or pursuing any Claim or any proceeding relating to any Claim.
“Majority Noteholders” means, at any time, Noteholders having at such time in excess of fifty percent
(50%) of the aggregate Commitments (or, if such Commitments are terminated, the outstanding principal amount
of the Notes) then in effect, ignoring, in such calculation, the Commitments of and outstanding Notes owing to
any Noteholder that has failed to perform its funding obligations in respect of its Commitment to make
subscriptions for Notes hereunder.
“Manufacturing Facility” means (i) the Shannon Manufacturing Facility and (ii) the London
Manufacturing Facility.
“Margin Stock” means “margin stock” within the meaning of Regulation U and Regulation X.
“Material Adverse Change” and “Material Adverse Effect” mean a material adverse change in or effect
on (i) the business, assets, operations or condition (financial or otherwise) of the Issuer and its Subsidiaries, taken
as a whole, (ii) the ability of any Obligor to perform its obligations under the Notes Documents, as and when due,
or (iii) the legality, validity, binding effect or enforceability of the Notes Documents or the rights and remedies of
the Administrative Agent or the Noteholders under any of the Notes Documents.
“Material Agreement” means (i) any Contract to which the Issuer or any of its Subsidiaries is a party or a
beneficiary from time to time, the absence or termination of which could reasonably be expected to result in a
Material Adverse Effect, and (ii) without duplication, any other Contract to which the Issuer or any of its
Subsidiaries is a party or a guarantor (or equivalent) that, during any period of twelve (12) consecutive months is
reasonably expected to (1) result in payments or receipts (including royalty, licensing or similar payments) made
to the Issuer or any of its Subsidiaries in an aggregate amount in excess of $5,000,000, or (2) require payments or
17
expenditures (including royalty, licensing or similar payments) to be made by the Issuer or any of its Subsidiaries
in an aggregate amount in excess of $5,000,000.
“Material Indebtedness” means, at any time, any Indebtedness of any Obligor or any Subsidiary thereof
(excluding any intercompany Indebtedness by and among the Obligors and their respective Subsidiaries that is
permitted hereunder), the outstanding principal amount of which, individually or in the aggregate, exceeds
$5,000,000 (or the Equivalent Amount in other currencies).
“Material Intellectual Property” means any Intellectual Property of the Obligors, whether currently
owned or licensed, or acquired, developed or otherwise licensed or obtained after the date hereof the loss of which
could reasonably be expected to result in a Material Adverse Effect.
“Maturity Date” means August 2, 2026.
“MD&A” has the meaning set forth in Section 8.01(c).
“Medicaid” means that government-sponsored entitlement program under Title XIX, P.L. 89-97 of the
Social Security Act, which provides federal grants to states for medical assistance based on specific eligibility
criteria, as set forth on Section 1396, et seq. of Title 42 of the United States Code.
“Medicare” means that government-sponsored insurance program under Title XVIII, P.L. 89-97, of the
Social Security Act, which provides for a health insurance system for eligible elderly and disabled individuals, as
set forth at Section 1395, et seq. of Title 42 of the United States Code.
“Minimum Liquidity Account” has the meaning set forth in Section 10.01.
“Multiemployer Plan” means any multiemployer plan, as defined in Section 400l(a)(3) of ERISA, to
which any ERISA Affiliate incurs or otherwise has any obligation or liability, contingent or otherwise.
“Net Cash Proceeds”, means, (i) with respect to any Casualty Event experienced or suffered by the Issuer
or any of its Subsidiaries, the amount of cash proceeds received (directly or indirectly) including, without
limitation, in the form of insurance proceeds or condemnation awards in respect of such Casualty Event, from
time to time by or on behalf of such Person after deducting therefrom only (x) reasonable fees, costs and expenses
related thereto incurred by the Issuer or such Subsidiary in connection therewith, (y) amounts required to be
repaid on account of any Permitted Indebtedness (other than the Obligations) required to be repaid as a result of
such Casualty Event, (y) amounts required to be reserved in accordance with GAAP for indemnities and against
liabilities associated with the property damaged, destructed or condemned in such Casualty Event, and (z) Taxes
(including transfer Taxes or net income Taxes) paid or payable in connection therewith; and (ii) with respect to
any Asset Sale by the Issuer or any of its Subsidiaries, the amount of cash proceeds received (directly or
indirectly) from time to time by or on behalf of such Person after deducting therefrom only (x) reasonable fees,
costs and expenses related thereto incurred by the Issuer or such Subsidiary in connection therewith, (y) amounts
required to be repaid on account of any Permitted Indebtedness (other than the Obligations) required to be repaid
as a result of such Asset Sale, and (z) Taxes (including transfer Taxes or net income Taxes) paid or
18
payable in connection therewith; provided that, in each case of clauses (i) and (ii), costs and expenses shall only
be deducted to the extent, that the amounts so deducted are (x) actually paid to a Person that is not an Affiliate of
the Issuer or any of its Subsidiaries and (y) properly attributable to such Casualty Event or Asset Sale, as the case
may be.
“Noteholders” has the meaning set forth in the preamble hereto.
“Notes” means, as the context may require, any of the Tranche 1 Notes or the Tranche 2 Notes, and “Notes” means,
collectively, any combination of the foregoing, as the case may be.
“Notes Certificate” means a notes certificate in the form set out in Exhibit A.
“Notes Documents” means, collectively, this Agreement, the Notes Certificates, the Security Documents, any
Guarantee, any Notes Subscription Request, any Assignment Agreement, any Transfer Certificate, any Warrant Certificate,
the Intercompany Subordination Agreement, and any other guaranty, security agreement, subordination agreement,
intercreditor agreement or other present or future document, instrument, agreement, certificate or other
amendment, waiver or modification of the foregoing, delivered to the Administrative Agent or any Noteholder in
connection with this Agreement or any of the other Notes Documents, in each case, as amended or otherwise
modified.
“Notes Register” has the meaning set forth in Section 14.05(d).
“Notes Subscription” means a subscription for Tranche 1 Notes or Tranche 2 Notes.
“Notes Subscription Date” means the Closing Date and each Tranche 2 Notes Subscription Date as
applicable.
“Notes Subscription Request” means a written notice substantially in the form of Exhibit B.
“NY UCC” means the UCC as in effect from time to time in New York.
“Obligations” means, with respect to any Obligor, all amounts, obligations, liabilities, covenants and
duties of every type and description (including all Guaranteed Obligations) owing by such Obligor to any Secured
Party, any indemnitee hereunder or any participant, arising out of, under, or in connection with, any Notes
Document, whether direct or indirect (regardless of whether acquired by assignment), absolute or contingent, due
or to become due, whether liquidated or not, now existing or hereafter arising and however acquired, and whether
or not evidenced by any instrument or for the payment of money, including, without duplication, (i) if such
Obligor is the Issuer, all Notes, (ii) all interest, whether or not accruing after the filing of any petition in
bankruptcy or after the commencement of any insolvency, reorganization or similar proceeding, and whether or
not a claim for post-filing or post-petition interest is allowed in any such proceeding, and (iii) all other fees,
expenses (including fees, charges and disbursement of counsel), interest, commissions, charges, costs,
disbursements, indemnities and reimbursement of amounts paid and other sums chargeable to such Obligor under
any Notes Document. Notwithstanding the foregoing, the “Obligations” shall not include the Warrant Obligations
and any obligations under any other warrant or other instrument or any equity or other investment.
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“Obligors” means, collectively, the Issuer, the Subsidiary Guarantors and their respective successors and
permitted assigns.
“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.
“One-Month Term SOFR” means, the Term SOFR Reference Rate (expressed, as a decimal, rounded
upwards, if necessary, to the nearest 1/100th of 1%) for a one month tenor on the day (such day, the “Periodic
Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day
of the Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of
5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate
for the one month tenor has not been published by the Term SOFR Administrator, then Term SOFR will be the
Term SOFR Reference Rate for a one month tenor as published by the Term SOFR Administrator on the first
preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor
was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities
Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term
SOFR Determination Day.
“Organic Document” means, for any Person, such Person’s formation documents, including, as applicable
its certificate of incorporation, by-laws, constitution, memorandum and articles of association, certificate of
partnership, partnership agreement, certificate of formation, limited liability agreement, constitution, operating
agreement and all shareholder agreements, voting trusts and similar arrangements applicable to such Person’s
Equity Interests, or any equivalent document of any of the foregoing.
“Original Noteholder” has the meaning set forth in the preamble hereto.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or
former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising
from such Recipient having executed, delivered, become a party to, performed its obligations under, received
payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or
enforced any Notes Documents, or sold or assigned an interest in any Notes or Notes Documents).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or
similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or
registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Notes
Documents, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other
than an assignment made pursuant to Section 5.03(h)).
“Overage Deed” means an overage deed relating to the London Manufacturing Facility made between (1)
the English Guarantor and (2) Moorfields Eye Hospital NHS Foundation Trust dated 14 December 2018.
“Participant” has the meaning set forth in Section 14.05(e).
“Participant Register” has the meaning set forth in Section 14.05(e).
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“Patents” means all patents and patent applications, including (i) the reissues, divisions, continuations,
renewals, extensions, and continuations in part thereof, (ii) all rights to recover for all past, present and future
infringements thereof and all rights to sue therefor, and (iii) all rights whatsoever accruing thereunder or
pertaining thereto throughout the world.
“Patriot Act” has the meaning set forth in Section 14.20.
“Payment Date” means (i) the last day of each Interest Period; provided that if such last day of any
Interest Period is not a Business Day, then the Payment Date shall be the next succeeding Business Day, and (ii)
the Maturity Date.
“PBGC” means the United States Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.
“Perfection Requirements” means, solely in respect of the English Guarantor and the Irish Subsidiary
Guarantor, the making or the procuring of filings, stampings, registrations, notarisations, endorsements,
translations and/or notifications of any Notes Document (and/or any Liens created under it) necessary for the
validity, enforceability (as against the relevant Obligor or any relevant third party) and/or perfection of that Notes
Document.
“Periodic Term SOFR Determination Day” has the meaning set forth in the definition of “One-Month
Term SOFR”.
“Permitted Acquisition” means any Acquisition by the Issuer or any of its Subsidiaries that satisfies each
of the following conditions:
(a)
immediately prior to, and after giving effect to such Acquisition, (i) all representations and
warranties contained in this Agreement and the other Notes Documents that are qualified by materiality,
Material Adverse Effect or the like are, in each case, true and correct, (ii) all representations and
warranties contained in this Agreement and the other Notes Documents that are not qualified by
materiality, Material Adverse Effect or the like are, in each case, true and correct in all material respects,
and (iii) no Event of Default shall have occurred and be continuing or could reasonably be expected to
result therefrom;
(b)
all transactions in connection therewith shall be consummated in accordance with all
applicable Laws and in conformity with all applicable Governmental Approvals, in each case, in all
material respects;
(c)
in the case of an Acquisition of Equity Interests of any Person, all of such Equity Interests
(except for any such securities in the nature of directors’ qualifying shares required pursuant to any
applicable Law) acquired, or otherwise issued by such Person or any newly formed Subsidiary of the
Issuer in connection with such acquisition, shall be owned by an Obligor or a wholly-owned Subsidiary of
an Obligor, and the Issuer shall have taken, or caused to be taken, as of the date such Person becomes a
Subsidiary of the Issuer, each of the actions set forth in Section 8.12(a), if applicable;
21
(d)
the Person (in the case of an Acquisition of Equity Interests), business, property, or assets
that is the subject of such Acquisition shall be engaged or used, as the case may be, in substantially the
same business or lines of business in which the Issuer and its Subsidiaries are engaged as of the Closing
Date;
(e)
on a pro forma basis after giving effect to such Acquisition, the Issuer and its Subsidiaries
shall be in compliance with the financial covenant set forth in Section 10.01;
(f)
with respect to any Acquisition, the consideration paid for such Acquisition (i) when taken
together with consideration paid for all other Acquisitions consummated or effected during the prior period
of twelve (12) consecutive months ending on the date such Acquisition becomes effective, does not exceed
$20,000,000 in the aggregate (which amount shall include the aggregate amount of outstanding principal
and unpaid interest (or equivalent if an equivalent concept exists in its jurisdiction of organization or
incorporation) in respect of any Indebtedness assumed, incurred or otherwise created in connection with
any such applicable Acquisitions, including all related Contingent Acquisition Obligations), and (ii) when
taken together with consideration paid for all other Acquisitions consummated or effected since the
Closing Date, does not exceed $50,000,000 in the aggregate (which amount shall also include, without
duplication, the aggregate amount of outstanding principal and unpaid interest (or equivalent) in respect of
any Indebtedness assumed, incurred or otherwise created in connection with any such applicable
Acquisitions, including all related Contingent Acquisition Obligations); provided that for purposes of
determining amounts to be calculated for purposes of this clause (f), non-cash consideration shall be
determined on the basis of fair market value as determined by the Issuer’s Board acting in good faith;
(g)
the Issuer shall have provided the Administrative Agent with at least ten (10) calendar days’
prior written notice of any such Acquisition, together with any available summaries, prepared in
reasonable detail, of all material non-confidential due diligence conducted by or on behalf of the Issuer or
the applicable Subsidiary, as applicable, prior to such Acquisition;
(h)
at least three (3) Business Days prior to the proposed date of the Acquisition, the
Administrative Agent shall have received a certificate of a Responsible Officer of the Issuer (prepared in
reasonable detail), certifying that the Acquisition complies with the requirements of this definition;
(i)
to the extent that the purchase price for any such Acquisition is paid in Equity Interests, all
such Equity Interests shall be Qualified Equity Interests;
(j)
promptly upon request by the Administrative Agent in the case of any Acquisition that has
a purchase price in excess of $25,000,000, the Issuer shall provide (i) a copy of the draft purchase
agreement related to the proposed Acquisition (and any related documents reasonably requested by the
Administrative Agent), (ii) any available quarterly and annual financial statements of the Person whose
Equity Interests or assets are being acquired for the twelve (12) month period ending forty-five (45) days
immediately prior to
22
such Acquisition, including any audited financial statements that are available, and (iii) any other
information reasonably requested by the Administrative Agent and available to the Obligors; and
(k)
neither the Issuer nor any of its Subsidiaries shall, in connection with any such Acquisition,
assume or remain subject to or liable with respect to (x) any Indebtedness of the related seller or the
business, Person or properties acquired, except to the extent permitted pursuant to Section 9.01, (y) any
Lien on any business, Person or assets acquired, except to the extent permitted pursuant to Section 9.02, or
(z) any other liability (including Tax, ERISA and environmental liabilities), except (with respect to
liabilities under this clause (k)), to the extent the assumption of any such liability could not reasonably be
expected to result in a Material Adverse Effect; provided that any other such Indebtedness, liabilities or
Liens not permitted to be assumed, continued or otherwise supported by the Issuer or any of its
Subsidiaries hereunder shall be paid in full or released as to the business, Persons or properties being so
acquired substantially on or before the consummation of such Acquisition.
“Permitted Bond Hedge Transaction” means any bond hedge, capped call or similar option transaction
entered into by the Issuer in respect of the Issuer’s ordinary shares and entered into in connection with the
issuance of Permitted Convertible Indebtedness; provided that (i) the terms, conditions and covenants of each such
transaction shall be customary for transactions of such type, as determined in good faith by the Issuer, (ii) such
transaction is consummated substantially concurrently with the issuance of such Permitted Convertible
Indebtedness, and (iii) the purchase price for such Permitted Bond Hedge Transaction (net of any proceeds to
Issuer from the sale of any related Permitted Warrant Transaction) (x) does not exceed the Net Cash Proceeds
received by the Issuer from the issuance of Permitted Convertible Indebtedness and (y) is financed with the
proceeds of such issuance.
“Permitted Cash Equivalent Investments” means (i) marketable direct obligations
issued or
unconditionally guaranteed by the United States or any agency or any state thereof having maturities of not more
than one year from the date of acquisition, (ii) commercial paper maturing no more than one year after the date of
its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors
Service, Inc., (iii) certificates of deposit, or bankers’ acceptance maturing no more than one year after issue
provided that the account in which any such certificate of deposit is maintained is subject to an account control
agreement in favor of the Administrative Agent, (iv) money market funds at least ninety five percent (95%) of the
assets of which constitute Permitted Cash Equivalent Investments of the kinds described in clauses (i) through
(iii) of this definition, (v) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (i) above, and (vi) investments permitted pursuant to an investment policy approved
by the Issuer’s Board, as amended from time to time, provided that such investment policy (and any such
amendment thereto) shall have been approved in advance in writing by the Administrative Agent.
“Permitted Convertible Indebtedness” means unsecured Indebtedness in the form of notes issued by the
Issuer that (i) as of the date of issuance thereof contains terms, conditions, covenants, conversion or exchange
rights, redemption rights and offer to repurchase rights, in each case, as are typical and customary for notes of
such type, as determined by the Issuer, (ii) is convertible or
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exchangeable into a fixed number of shares of ordinary shares of the Issuer (or Qualified Equity Interests
following a merger event or other conversion or exchange of ordinary shares of the Issuer), cash or a combination
thereof (such amount of cash determined by reference to the price of the Issuer’s ordinary shares or such Qualified
Equity Interests), and cash in lieu of fractional shares of ordinary shares of the Issuer or such Qualified Equity
Interests, (iii) has a stated final maturity date that is no earlier than the date that is one hundred eighty (180) days
after the Maturity Date (the “Earliest Date”), (iv) shall not be required to be repaid, prepaid, redeemed,
repurchased or defeased (whether through scheduled amortization, principal payments, mandatory redemptions,
payments of principal or otherwise), whether on one or more fixed dates, prior to the Earliest Date, except (x)
upon the occurrence of an event of default, “fundamental change” or equivalent or (y) following the Issuer’s
election to redeem such notes; provided that the right to convert such Indebtedness into Qualified Equity Interests,
cash or any combination thereof shall not be deemed to violate this clause (iv), and (v) is not supported by a
Guarantee made or issued by any Subsidiary of the Issuer that is not an Obligor.
“Permitted Indebtedness” means any Indebtedness permitted under Section 9.01.
“Permitted Liens” means any Liens permitted under Section 9.02.
“Permitted Refinancing” means, with respect to any Indebtedness permitted to be refinanced, extended,
renewed or replaced hereunder, any refinancings, extensions, renewals and replacements of such Indebtedness;
provided that such refinancing, extension, renewal or replacement shall not (i) increase the outstanding principal
amount of the Indebtedness being refinanced, extended, renewed or replaced, (ii) contain terms relating to
outstanding principal amount, amortization, maturity, collateral security (if any) or subordination (if any), or other
material terms that, taken as a whole, are less favorable in any material respect to the Issuer and its Subsidiaries or
the Secured Parties than the terms of any agreement or instrument governing the Indebtedness being refinanced,
(iii) have an applicable interest rate or equivalent yield that exceeds the interest rate or equivalent yield of the
Indebtedness being refinanced, (iv) contain any new requirement to grant any Lien or to give any Guarantee that
was not an existing requirement of the Indebtedness being refinanced and (v) after giving effect to such
refinancing, extension, renewal or replacement, no Event of Default shall have occurred (or could reasonably be
expected to occur) as a result thereof.
“Permitted Warrant Transaction” means any call option, warrant or right to purchase (or substantively
equivalent derivative transaction) relating to ordinary shares (or other securities or property following a merger
event or other change of the ordinary shares) and/or cash (in an amount determined by reference to the price of
such ordinary shares) sold by Issuer substantially concurrently with any purchase by Issuer of a related Permitted
Bond Hedge Transaction and as may be amended in accordance with its terms; provided that (x) that the terms,
conditions and covenants of each such call option transaction are customary for agreements of such type, as
determined in good faith by Issuer and (y) such call option transaction would be classified as an equity instrument
in accordance with GAAP.
“Person” means any individual, corporation, company, voluntary association, partnership, limited liability
company, exempted company, joint venture, trust, unincorporated organization or Governmental Authority or
other entity of whatever nature.
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“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the
Issuer or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Proceeding” has the meaning set forth in Section 14.03(c).
“Prohibited Payment” means any bribe, rebate, payoff, influence payment, kickback or other payment or
gift of money or anything of value (including meals or entertainment) to any officer, employee or ceremonial
office holder of any government or instrumentality thereof, political party or supra-national organization (such as
the United Nations), any political candidate, any royal family member or any other person who is connected or
associated personally with any of the foregoing for the purpose of influencing any act or decision of such payee in
his official capacity, inducing such payee to do or omit to do any act in violation of his lawful duty, securing any
improper advantage or inducing such payee to use his influence with a government or instrumentality thereof to
affect or influence any act or decision of such government or instrumentality, in each case that is prohibited under
any applicable Law.
“Proportionate Share” means, with respect to each Noteholder, the percentage obtained by dividing (i) the
sum of all Commitments (or, if the Commitments are terminated, the outstanding principal amount of the Notes)
of such Noteholder then in effect by (ii) the sum of all Commitments (or, if the Commitments are terminated, the
outstanding principal amount of the Notes) of all Noteholders then in effect.
“Proposal Letter” means the Proposal Letter, dated July 7, 2022, between the Issuer and Perceptive
Advisors LLC (as supplemented by the outline of proposed terms and conditions attached thereto).
“QEB Exemption” has the meaning set forth in Section 3.02(f).
“Qualified Equity Interest” means, with respect to any Person, any Equity Interest of such Person that is
not a Disqualified Equity Interest.
“Qualified Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a
Multiemployer Plan (i) that is or was at any time maintained or sponsored by any Obligor or any ERISA Affiliate
thereof or to which any Obligor or any ERISA Affiliate thereof has ever made, or was ever obligated to make,
contributions, and (ii) that is intended to be tax qualified under Section 401(a) of the Code.
“Real Property Collateral Security Documents” means any mortgage or deed of trust or any other real
property security document executed or required hereunder to be executed by the applicable Obligors and granting
a security interest in real property owned or leased (as tenant) by such Obligor in favor of the Secured Parties for
purposes of securing the Obligations.
“Recipient” means any Noteholder, the Administrative Agent or any other recipient of any payment to be
made by or on account of any Obligation, as applicable.
25
“Recognised Stock Exchange” has the meaning given to that term in section 1005 of the UK ITA.
“Reference Rate” means One-Month Term SOFR; provided that if the Administrative Agent determines
(which determination shall be conclusive absent manifest or demonstrable error) that One-Month Term SOFR
cannot be determined pursuant to the definition thereof or a Reference Rate Transition Event has occurred with
respect to One-Month Term SOFR or the then-current Reference Rate, then “Reference Rate” means the
applicable “Reference Rate Replacement” to the extent that such Reference Rate Replacement has replaced such
prior reference rate pursuant to Section 1.05.
“Reference Rate Replacement” means, with respect to any Reference Rate Transition Event, an alternate
reference rate that has been selected by the Administrative Agent and the Issuer, each of which agree, in good
faith, to establish an alternate reference rate of interest to One-Month Term SOFR that gives due consideration to
the then prevailing market convention for determining a rate of interest for middle-market loans in the United
States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest
and such other related changes to this Agreement as may be applicable; provided, further that, until such alternate
rate of interest is agreed upon by the Administrative Agent and the Issuer, the Reference Rate for purposes hereof
and of each other Notes Document shall be the Wall Street Journal Prime Rate.
“Reference Rate Transition Event” means the occurrence of one or more of the following events with
respect to the Reference Rate then in effect:
(a)
a public statement or publication of information by or on behalf of the administrator of such
Reference Rate announcing that such administrator has ceased or will cease to provide such Reference
Rate, permanently or indefinitely; provided that, at the time of such statement or publication, there is no
successor administrator that will continue to provide such Reference Rate;
(b)
a public statement or publication of information by the Governmental Authority governing
or regulating the administrator of such Reference Rate, the U.S. Federal Reserve System, an insolvency
official with jurisdiction over the then-current administrator for such Reference Rate, a resolution authority
with jurisdiction over the then-current administrator for such Reference Rate or a court or an entity with
similar insolvency or resolution authority over the administrator for such Reference Rate, which in any
case states that the then-current administrator of such Reference Rate has ceased or will cease to provide
such Reference Rate permanently or indefinitely; provided that, at the time of such statement or
publication, there is no successor administrator that will continue to provide such Reference Rate; or
(c)
a public statement or publication of information by the Governmental Authority governing
or regulating the then-current administrator of such Reference Rate announcing that such Reference Rate
is no longer representative.
For the avoidance of doubt, a “Reference Rate Transition Event” will be deemed to have occurred with
respect to any Reference Rate if a public statement or publication of information set
26
forth above has occurred with respect to each then-current available tenor of such Reference Rate (or the
published component used in the calculation thereof).
“Regulation T” means Regulation T of the Board of Governors of the Federal Reserve System, as
amended.
“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as
amended.
“Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System, as
amended.
“Related Fund” means, with respect to any Noteholder, a fund which is managed or advised by the same
investment manager or investment adviser as such Noteholder or, if it is managed by a different investment
manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the
investment manager or investment adviser of such Noteholder.
“Related Parties” has the meaning set forth in Section 14.16.
“Requisite Consents” has the meaning set forth in Section 8.19(c)(ii).
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial
Institution, a UK Resolution Authority.
“Responsible Officer” of any Person means each of the president, chief executive officer, chief financial
officer, chief accounting officer, director, secretary, treasurer, general counsel and similar officer of such Person.
“Restricted Payment” means any dividend or other distribution (whether in cash, Equity Interests or other
property) with respect to any Equity Interests of the Issuer or any of its Subsidiaries, any payment of interest,
principal or fees in respect of any Indebtedness owed by the Issuer or any of its Subsidiaries to any holder of any
Equity Interests of the Issuer or any of its Subsidiaries, or any payment (whether in cash, Equity Interests or other
property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests of the Issuer or any of its Subsidiaries, or any
option, warrant or other right to acquire any such Equity Interests of the Issuer or any of its Subsidiaries.
“Restrictive Agreement” means any Contract or other arrangement that prohibits, restricts or imposes any
condition upon (i) the ability of the Issuer or any of its Subsidiaries to create, incur or permit to exist any Lien
upon any of its properties or assets (other than (x) customary provisions in Contracts (including without limitation
anti-assignment clauses, leases and licenses of Intellectual Property) restricting the assignment thereof and (y)
restrictions or conditions imposed by any Contract governing secured Permitted Indebtedness permitted under
Section 9.01(g), to the extent that such restrictions or conditions apply only to the property or assets securing such
Indebtedness), or (ii) the ability of the Issuer or any of its Subsidiaries to make Restricted Payments with respect
to any of their respective Equity Interests or to make or repay loans or advances to
27
the Issuer or any of its Subsidiaries or such other Obligor or to Guarantee Indebtedness of the Issuer or any of its
Subsidiaries thereof or such other Obligor.
“Sanction” means any international economic sanction administered or enforced by the United States
government (including, without limitation, OFAC), the United Nations Security Council, the European Union or
its Member States, Her Majesty’s Treasury or other relevant sanctions authority.
“Secured Party” means each Noteholder, the Administrative Agent, each other Indemnified Party, any
other holder of any Obligation, and any of their respective permitted transferees or assigns.
“Securities Account” means any securities account, as such term is defined in Section 8-501 of the NY
UCC.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
“Security Documents” means, collectively, the Account Pledge Agreement, each Real Property Collateral
Security Document (if any), each Foreign Collateral Security Document, each Foreign Real Property Security
Document and each other security agreement, control agreement or financing statement, registration, recordation,
filing, instrument or approval required, entered into or recommended to grant, perfect and otherwise render
enforceable Liens in favor of the Secured Parties for purposes of securing the Obligations, including (without
limitation) pursuant to Section 8.12.
“Shannon Manufacturing Facility” means Buildings 2 & 3, Block K, Shannon Free Zone, Shannon, Co.
Clare.
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR
Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the
secured overnight financing rate).
“Solvent” means, at any time of determination and with respect to any Person and its Subsidiaries, taken as
a whole, that (i) the present fair saleable value of the property of such Person and its Subsidiaries is greater than
the total amount of liabilities (including contingent liabilities) of such Person and its Subsidiaries, (ii) the present
fair saleable value of the property of such Person and its Subsidiaries is not less than the amount that will be
required to pay the probable aggregate liabilities of such Person and its Subsidiaries on their collective debts as
they become absolute and matured, (iii) such Person and its Subsidiaries have not incurred and does not intend to,
and does not believe that it will, incur debts or liabilities beyond such Person’s and its Subsidiaries’ ability to pay
as such aggregate debts and liabilities mature.
“Specified Assets” means any of the Issuer’s (i) gene regulation platform technologies, (ii) AAV-AQP1
program, or (iii) AAV-GAD program, as further described in reasonable detail on Schedule B hereto, and all
assets and properties of the Issuer and its Subsidiaries reasonably
28
related thereto (including Intellectual Property); provided that the Specified Assets shall not at any time include
any assets or property of the Issuer or any of its Subsidiaries that constitutes Collateral.
“Specified Assets Conditions” means with respect to any Specified Asset, in whole or in part, (i) no Event
of Default has occurred and is continuing, or could reasonably be expected to occur, as a result of the entry into
such transaction, (ii) such transaction does not result in, nor could it reasonably be expected to result in, the
outright sale or disposition of any Specified Asset, in whole or in part, (iii) such transaction does not constitute,
nor could it reasonably be expected to constitute, an Impermissible Specified Assets Exclusive License and (iv)
such transaction does not interfere with or adversely affect, nor could it reasonably be expected to interfere with or
adversely affect, the Secured Parties’ Liens on any Collateral or its rights or remedies in respect thereof.
“Sterling” or “£” means lawful money of the United Kingdom.
“Subsidiary” means, with respect to any Person (for purposes of this definition, the “parent”) at any date,
any corporation, limited liability company, exempted company, partnership, association or other entity the
accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements
if such financial statements were prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, exempted company, partnership, association or other entity (i) of which
securities or other ownership interests representing more than fifty percent (50%) of the equity or more than fifty
percent (50%) of the ordinary voting power or, in the case of a partnership, more than fifty percent (50%) of the
general partnership interests are, as of such date, owned, controlled or held, directly or indirectly or (ii) that is, as
of such date, otherwise Controlled, by the parent or one or more direct or indirect subsidiaries of the parent or by
the parent and one or more direct or indirect subsidiaries of the parent. Unless otherwise specified, all references
herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Issuer.
“Subsidiary Guarantor” means, initially as of the Closing Date, each Subsidiary of the Issuer identified
under the caption “SUBSIDIARY GUARANTORS” on the signature pages hereto and, thereafter, each Subsidiary
of such Subsidiary Guarantors (i.e. the Subsidiary Guarantors as of the Closing Date) that becomes, or is required
to become, a “Subsidiary Guarantor” after the Closing Date pursuant to Section 8.12.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including
backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any
interest, additions to tax or penalties applicable thereto.
“Technical Information” means all trade secrets and other proprietary or confidential information, public
information, non-proprietary know-how, any information of a scientific, technical, or business nature in any form
or medium, standards and specifications, conceptions, ideas, innovations, discoveries, Invention disclosures, all
documented research, developmental, demonstration or engineering work and all other information, data, plans,
specifications, reports, summaries, experimental data, manuals, models, samples, know-how, technical
information, systems, methodologies, computer programs, information technology and any other information.
29
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a
successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable
discretion).
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Title IV Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) other than a
Multiemployer Plan (i) that is or was at any time maintained or sponsored by any Obligor or any ERISA Affiliate
thereof or to which any Obligor or any ERISA Affiliate thereof has ever made, or was obligated to make,
contributions, and (ii) that is or was subject to Section 412 of the Code, Section 302 of ERISA or Title IV of
ERISA.
“Trademarks” means all trade names, trademarks and service marks, logos, trademark and service mark
registrations, and applications for trademark and service mark registrations, including (i) all renewals of trademark
and service mark registrations, (ii) all rights to recover for all past, present and future infringements thereof and all
rights to sue therefor, and (iii) all rights whatsoever accruing thereunder or pertaining thereto throughout the
world, together, in each case, with the goodwill of the business connected with the use thereof.
“Tranche 1 Facility” means the term notes facility made available under this Agreement as described in
Section 2.01(a).
“Tranche 1 Facility Fee” has the meaning set forth in Section 3.05.
“Tranche 2 Maximum Issue Amount” means $25,000,000.
“Tranche 1 Notes” has the meaning set forth in the recitals hereto.
“Tranche 2 Facility” means the term notes facility made available under this Agreement as described in
Section 2.01(b).
“Tranche 2 Facility Fee” has the meaning set forth in Section 3.05.
“Tranche 2 Issue Date” means any date on which Tranche 2 Notes are issued and subscribed for pursuant
to the terms and conditions hereof.
“Tranche 2 Notes” has the meaning set forth in the recitals hereto.
“Tranche 2 Notes Draw Period” has the meaning set forth in in the recitals hereto.
“Transactions” means the negotiation, preparation, execution, delivery and performance by each Obligor
of this Agreement and the other Notes Documents to which such Obligor is (or is intended to be) a party, the
issuance and sale of the Notes hereunder, and all other transactions contemplated pursuant to this Agreement and
the other Notes Documents.
“UCC” means, with respect to any applicable jurisdictions, the Uniform Commercial Code as in effect in
such jurisdiction, as may be modified from time to time.
30
“UCL Licenses” means each stand alone license agreement entered into from January to February 2019,
by and between the English Guarantor and UCL Business plc, in each case, as may be amended, restated,
supplemented or otherwise modified from time to time.
“UK CTA” means the Corporation Tax Act 2009 of the United Kingdom (as amended).
“UK DTTP Scheme” means HMRC’s Double Taxation Treaty Passport scheme, as modified from time to
time.
“UK Excluded Taxes” means any UK Tax Deduction from a payment by a Withholding Agent under a
Notes Document, if on the date on which the payment falls due:
(i)
the payment could have been made to the relevant Noteholder without a UK Tax Deduction if that
Noteholder had been a UK Qualifying Noteholder, but on that date such Noteholder is not or has ceased to be a
UK Qualifying Noteholder other than as a result of any Change of Law;
(ii)
the relevant Noteholder is a UK Qualifying Noteholder solely by virtue of sub-paragraph (a)(ii) of
the definition of UK Qualifying Noteholder and (i) that relevant Noteholder has not given a UK Tax Confirmation
to the Administrative Agent, and (ii) the payment could have been made to the relevant Noteholder without a UK
Tax Deduction if that Noteholder had given a UK Tax Confirmation to the Administrative Agent, on the basis that
the UK Tax Confirmation would have enabled the Withholding Agent making the payment to have formed a
reasonable belief that the payment was an “excepted payment” for the purpose of section 930 of the UK ITA;
(iii)
the relevant Noteholder is a UK Qualifying Noteholder solely under sub-paragraph (a)(ii) of the
definition of UK Qualifying Noteholder and (i) an officer of HMRC has given (and not revoked) a direction (a
“UK Direction”) under section 931 of the UK ITA which relates to that payment and that Noteholder has received
from the Issuer a certified copy of that UK Direction, and (ii) the payment could have been made to the
Noteholder without any UK Tax Deduction if that UK Direction had not been made; or
(iv)
the relevant Noteholder is a UK Treaty Noteholder (or a Noteholder which would be a UK Treaty
Noteholder upon the completion of any necessary procedural formalities) and the payment could have been made
to the Noteholder without a UK Tax Deduction had that Noteholder complied with its obligations under
paragraphs (i) or (j) of Section 5.03;
provided that any UK Tax Deduction from a payment by a Withholding Agent to Perceptive Credit Holdings III,
LP (but not its any of its successors or assigns) shall not be treated as UK Excluded Taxes for the purposes of this
Agreement. For the avoidance of doubt, it is clarified that once the Notes are listed on a Recognised Stock
Exchange pursuant to Section 3.02(f), no UK Tax Deduction shall be treated as a UK Excluded Tax for the
purposes of this Agreement.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA
Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential Regulation Authority)
or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by
the United Kingdom Financial Conduct
31
Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit
institutions or investment firms.
“UK ITA” means the Income Tax Act 2007 of the United Kingdom (as amended).
“UK Limitation Acts” means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.
“UK Non-Bank Noteholder” means a Noteholder which falls within clause (a)(ii) of the definition of “UK
Qualifying Noteholder” and: (a) where such Noteholder is a party hereto as at the date of this Agreement, is
described as such in Schedule 1 (Commitments); or (b) where such a Noteholder becomes a party hereto after the
date of this Agreement, gives a UK Tax Confirmation in the documentation which it executes on becoming a party
hereto.
“UK Qualifying Noteholder” means a successor or assignee of Perceptive Credit Holdings III, LP that is:
(a)
a Noteholder which is beneficially entitled to interest payable to that Noteholder in respect of an
advance under a Notes Document and is:
(i)
a Noteholder:
(A)
which is a bank (as defined for the purpose of section 879 of the UK ITA) making
an advance under a Notes Document and is within the charge to United Kingdom corporation tax as
respects any payments of interest made in respect of that advance or would be within such charge
as respects such payments apart from section 18A of the UK CTA; or
(B)
in respect of an advance made under a Notes Document by a person that was a bank
(as defined for the purpose of section 879 of the UK ITA) at the time that such advance was made
and is within the charge to United Kingdom corporation tax as respects any payments of interest
made in respect of that advance; or
(ii)
a Noteholder which is:
(A)
(B)
(1)
a company resident in the United Kingdom for United Kingdom tax purposes;
a partnership, each member of which is:
a company so resident in the United Kingdom; or
(2)
a company not so resident in the United Kingdom which carries on a trade in the
United Kingdom through a permanent establishment and which brings into account in
computing its chargeable profits (within the meaning of section 19 of the UK CTA) the
whole of any share of interest
32
payable in respect of that advance that falls to it by reason of Part 17 of the UK CTA; or
(C)
a company not so resident in the United Kingdom which carries on a trade in the
United Kingdom through a permanent establishment and which brings into account interest payable
in respect of that advance in computing the chargeable profits (within the meaning of section 19 of
the UK CTA) of that company; or
(iii)
a UK Treaty Noteholder; or
(b)
a Noteholder which is a building society (as defined for the purposes of section 880 of the UK ITA)
making an advance under a Notes Document.
“UK Resolution Authority” means the Bank of England or any other public administrative authority
having responsibility for the resolution of any UK Financial Institution.
“UK Shareholder” means MeiraGTx Limited, a private limited company incorporated in England and
Wales with registration number 09501998 and whose registered office address is at 92 Britannia Walk, London,
England, N1 7NQ.
“UK Subsidiary Guarantor” means MeiraGTx UK II Limited, a private limited company incorporated in
England and Wales with registration number 09348737 and whose registered office address is at 92 Britannia
Walk, London, England, N1 7NQ.
“UK Tax Confirmation” means a confirmation in writing by a Noteholder that the person beneficially
entitled to interest payable to that Noteholder in respect of an advance under a Notes Document is either:
(i)
a company resident in the UK for UK tax purposes;
(ii)
a partnership each member of which is: (A) a company so resident in the UK; or (B) a company not
so resident in the UK which carries on a trade in the UK through a permanent establishment and which brings into
account in computing its chargeable profits (within the meaning of section 19 of the UK CTA) the whole of any
share of interest payable in respect of that advance that falls to it by reason of Part 17 of the UK CTA; or
(iii)
a company not so resident in the UK which carries on a trade in the UK through a permanent
establishment and which brings into account interest payable in respect of that advance in computing the
chargeable profits (within the meaning of section 19 of the UK CTA) of that company.
“UK Tax Deduction” means a deduction or withholding from a payment under any Notes Document for
and on account of any Taxes imposed by the United Kingdom.
“UK Treaty Noteholder” means a Noteholder which is a successor or assignee of Perceptive Credit
Holdings III, LP and: (i) is treated as a resident of a UK Treaty State for the purposes of the relevant Treaty; (ii)
does not carry on a business in the United Kingdom through a permanent establishment with which that
Noteholder’s participation in any advance is effectively
33
connected; and (iii) meets all other conditions applicable to that Noteholder in the relevant Treaty in order to
obtain full exemption from Tax imposed by the United Kingdom on payments of interest, including the
completion of any necessary procedural formalities.
“UK Treaty State” means a jurisdiction having a double taxation agreement (a “Treaty”) with the United
Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on payments of
interest.
“United Kingdom” and “UK” each means the United Kingdom of Great Britain and Northern Ireland.
“United States” or “U.S.” means the United States of America, its fifty (50) states and the District of
Columbia.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c)
a day on which the Securities Industry and Financial Markets Association recommends that the fixed income
departments of its members be closed for the entire day for purposes of trading in United States government
securities.
“Valuation Report” has the meaning set forth in Section 8.19(a).
“VAT” means: (i) any value added tax imposed by the UK Value Added Tax Act 1994 (as amended); (ii)
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value
added tax (EC Directive 2006/112); and (iii) any other tax of a similar nature, whether imposed in the UK or in a
member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph
(i) or (ii) above, or imposed elsewhere.
“Wall Street Journal Prime Rate” means the Wall Street Journal Prime Rate, as published and defined in
The Wall Street Journal.
“Warrant Certificate” means a Warrant Certificate in substantially the form of Exhibit J hereto, to be
delivered pursuant to Section 6.01(g), as amended or otherwise modified pursuant to the terms thereof.
“Warrant Obligations” means all Obligations of the Issuer arising out of, under or in connection with the
Warrant Certificates.
“Withdrawal Liability” means, at any time, any liability incurred (whether or not assessed) by any ERISA
Affiliate and not yet satisfied or paid in full at such time with respect to any Multiemployer Plan pursuant to
Section 4201 of ERISA.
“Withholding Agent” means the Issuer, any other Obligor and the Administrative Agent.
“Works” means means the fit out and other construction works currently being carried out, on the
instruction of the Issuer, to the Shannon Manufacturing Facility to include works carried out pursuant to planning
permissions references 20/840, 20/841, 21/45, 21/58, 21/222, 21/426, 21/488, 21/1242, 21/1356, 22/134 and
22/204.
34
“Write-Down and Conversion Powers” means (a) with respect to any EEA Resolution Authority, the
write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In
Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in
the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable
Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of
any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part
of that liability into shares, securities or obligations of that Person or any other Person, to provide that any such
contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in
respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of
those powers.
1.02 Accounting Terms and Principles.
(a)
Unless otherwise specified, all accounting terms used in each Notes Document shall be interpreted,
and all accounting determinations and computations thereunder (including under Section 10 and any definitions
used in such calculations) shall be made, in accordance with GAAP. Unless otherwise expressly provided, all
financial covenants and defined financial terms shall be computed on a consolidated basis for the Issuer and its
Subsidiaries, in each case without duplication. Notwithstanding the foregoing, the representations and warranties
made in Section 7.08 and the covenants made in Section 8.04 shall be construed in accordance with UK GAAP,
as applicable.
(b)
If at any time any change in GAAP or the application thereof would affect the computation of any
financial term, covenant, ratio or requirement set forth in any Notes Document, and either the Issuer or the
Administrative Agent shall so request, the Administrative Agent and the Issuer shall negotiate in good faith to
amend such term, covenant, ratio or requirement to preserve the original intent thereof set forth in the applicable
Notes Document in light of such change in GAAP or application thereof; provided that, until so amended, such
term, covenant, ratio or requirement shall continue to be computed in accordance with GAAP prior to such change
therein for all purposes hereof.
Interpretation. For all purposes of this Agreement, except as otherwise expressly provided herein or
1.03
unless the context otherwise requires,
(a)
(b)
(c)
the terms defined in this Agreement include the plural as well as the singular and vice versa;
words importing gender include all genders;
any reference to a Section, Annex, Schedule or Exhibit refers to a Section of, or Annex, Schedule
or Exhibit to, this Agreement;
(d)
any reference to “this Agreement” refers to this Agreement, including all Annexes, Schedules and
Exhibits hereto, and the words herein, hereof, hereto and hereunder and words of similar import refer to this
Agreement and its Annexes, Schedules and Exhibits as a whole and not to any particular Section, Annex,
Schedule, Exhibit or any other subdivision;
35
(e)
(f)
references to days, months and years refer to calendar days, months and years, respectively;
all references herein to “include” or “including” shall be deemed to be followed by the words
“without limitation”;
(g)
the word “from” when used in connection with a period of time means “from and including” and
the word “until” means “to but not including”;
(h)
the words “asset” and “property” shall be construed to have the same meaning and effect and to
refer broadly to any and all assets and properties, whether tangible or intangible, real or personal, including cash,
securities, rights under contractual obligations and permits and any right or interest in any such assets or property;
(i)
accounting terms not specifically defined herein (other than “property” and “asset”) shall be
construed in accordance with GAAP;
(j)
the word “will” shall have the same meaning as the word “shall”;
(k)
where any provision in this Agreement or any other Notes Document refers to an action to be taken
by any Person, or an action which such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly;
(l)
references to any Lien granted or created hereunder or pursuant to any other Notes Document
securing any Obligations shall be deemed to be a Lien for the benefit of the Secured Parties; and
(m)
references to any Law will include all statutory and regulatory provisions amending, consolidating,
replacing, supplementing or interpreting such Law from time to time.
Unless otherwise expressly provided herein, references to organizational documents, agreements (including the
Notes Documents) and other contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto permitted by the Notes Documents.
If any obligation to pay any amount pursuant to the terms and conditions of any Notes Document falls due
on a day which is not a Business Day, then such required payment date shall be extended to the immediately
following Business Day. For the purposes of calculations made pursuant to the terms of this Agreement or
otherwise for purposes of compliance herewith, GAAP will be deemed to treat operating leases as set forth in the
definition of Capitalized Lease Obligations. For the avoidance of doubt, any lease that would have been
characterized as an operating lease under Accounting Standards Codification Topic No. 840, Leases, shall be
accounted for as an operating lease (and not as a capital lease or otherwise reflected on the Issuer’s consolidated
balance sheet) for purposes of this Agreement regardless of the implementation of Accounting Standards
Codification Topic No. 842, Leases, or any change in GAAP following the Closing Date that would otherwise
require such lease to be characterized or re-characterized (on a prospective or retroactive basis or otherwise) as a
capital lease.
36
1.04 Divisions. For all purposes under the Notes Documents, in connection with any division or plan of
division under Delaware law (or any comparable event under a different jurisdiction’s laws): (i) if any asset, right,
obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it
shall be deemed to have been transferred from the original Person to the subsequent Person, and (ii) if any new
Person comes into existence, such new Person shall be deemed to have been organized on the first date of its
existence by the holders of its Equity Interests at such time.
1.05 Reference Rate Replacement. Upon the occurrence of an event of the type described in the definition of
“Reference Rate Transition Event”, the Administrative Agent will promptly notify the Issuer thereof and as set
forth in the definition of “Reference Rate Replacement”, the Administrative Agent and the Issuer shall endeavor,
in good faith, to establish an alternate rate of interest to One-Month Term SOFR.
1.06 Times of Day; Times of Performance.
(a)
Unless otherwise specified, all references herein to times of day shall be references to New York
City time (daylight or standard, as applicable).
(b)
If any delivery or other performance obligation hereunder (other than payments) falls due on a day
which is not a Business Day, then such due date shall be extended to the immediately following Business Day.
1.07 Rates. The Administrative Agent does not warrant or accept responsibility for, and shall not have any
liability with respect to (a) the continuation of, administration of, submission of, calculation of or any other matter
related to the Term SOFR Reference Rate or One-Month Term SOFR, or any component definition thereof or
rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto, including
whether the composition or characteristics of any such alternative, successor or replacement rate will be similar to,
or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Term SOFR
Reference Rate or One-Month Term SOFR prior to its discontinuance or unavailability, or (b) the effect,
implementation or composition of any Conforming Changes. There is no assurance that the composition or
characteristics of any such alternative, successor or replacement Reference Rate will be similar to or produce the
same value or economic equivalence as One-Month Term SOFR or that it will have the same volume or liquidity
as did One-Month Term SOFR prior to its discontinuance or unavailability. The Administrative Agent and its
affiliates or other related entities may engage in transactions that affect the calculation of the Term SOFR
Reference Rate or One-Month Term SOFR, any alternative, successor or replacement rate or any relevant
adjustments thereto, in each case, in a manner that is adverse to the Issuer. The Administrative Agent may select
information sources or services in its reasonable discretion to ascertain the Term SOFR Reference Rate or One-
Month Term SOFR, in each case pursuant to the terms of this Agreement, and shall have no liability to the Issuer,
any Noteholder or any other Person for damages of any kind, including direct or indirect, special, punitive,
incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether
at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such
information source or service.
37
1.08 Miscellaneous.
(a)
(b)
The “date of this Agreement” is August 2, 2022.
The term “redemption” when used in relation to a Note means any prepayment of that Note (or a
portion thereof), by prepayment, redemption, purchase or any other means prior to the Maturity Date.
SECTION 2
THE COMMITMENTS AND THE NOTES
2.01
Issuance of Notes.
(a)
The parties to this Agreement acknowledge and agree that, prior to the amendment and restatement
of this Agreement as of the Amendment and Restatement Date, this Agreement provided for the borrowing of
certain loans, and such loans (in the aggregate principal amount of $75,000,000) were borrowed by the Issuer and,
immediately following such amendment and restatement, $75,000,000 in aggregate principal amount remains
outstanding under this Agreement as the Tranche 1 Notes pursuant to Section 2.01(b) below.
(b)
Accordingly, on the terms and subject to the conditions of this Agreement, (i) each Noteholder
subscribed for the Tranche 1 Notes, and the Issuer issued such Tranche 1 Notes, on the Closing Date in an
aggregate principal amount for all Noteholders in an aggregate amount of $75,000,000 and (ii) in the sole
discretion of the Majority Noteholders, during the Tranche 2 Notes Draw Period, the Issuer may request the
subscription by the Noteholders of the Tranche 2 Notes in an aggregate amount not to exceed the Tranche 2
Maximum Issue Amount.
(c)
No amount paid, repaid or prepaid by the Issuer or any Guarantor with respect to any Note may be
required to be subscribed or readvanced under the Notes Documents.
(d)
Any term or provision hereof (or of any other Notes Document) to the contrary notwithstanding,
Notes issued and the subscriptions hereunder will be denominated solely in Dollars and no other currency.
2.02
[Reserved].
2.03 Noteholder Representations. Each Noteholder hereby represents and warrants to the Issuer that:
(a)
The Noteholder is, and on the Closing Date was, (i) an “accredited investor” as that term is defined
in Rule 501(a) of Regulation D under the Securities Act and (ii) a “qualified institutional buyer” (as that term is
defined in Rule 144A of the Securities Act). The Noteholder is acquiring, or acquired on the Closing Date, the
Notes for investment for its own account and not with a current view towards, or for resale in connection with, the
public sale or distribution of the Notes, except pursuant to sales registered or exempted under the Securities Act.
(b)
The Noteholder understands and acknowledges that the Notes issued, or to be issued, are
“restricted securities” under the Securities Act inasmuch as they are being acquired
38
from the Company in a transaction not involving a public offering and that, under such Laws and applicable
regulations, such securities may be resold without registration under the Securities Act only in certain limited
circumstances. In addition, the Holder represents that it is familiar with Rules 144 and 144A, as presently in
effect, and understands the resale limitations imposed thereby and by the Securities Act.
(c)
The Noteholder acknowledges that it can bear the economic and financial risk of its investment for
an indefinite period and has such knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Notes. The Noteholder has had an opportunity to ask
questions and receive answers from the Issuer regarding the terms and conditions of the Notes and the business,
properties, prospects and financial condition of the Issuer.
2.04 Use of Proceeds. The Issuer shall use the proceeds of the issuance of Notes for working capital and
general corporate purposes, including the payment of fees and expenses associated with this Agreement and the
other Notes Documents and the transactions contemplated hereby and thereby.
2.05 Constitution of the Notes. The Notes will be:
(a)
(b)
14.05(d); and
issued in a minimum amount of $1,000,000 and integral multiples thereof;
considered issued when their details are registered in the Notes Register referred to in Section
(c)
subject to the terms and conditions of this Agreement.
Signing and authenticating Notes Certificates. A Notes Certificate shall not be considered to have been
2.06
issued unless and until it has been signed by the Issuer and authenticated by the Administrative Agent.
Status of Notes Certificate. A Notes Certificate shall serve as evidence of the relevant records in the
2.07
Notes Register and shall not represent title to the Notes. In the event of a conflict between information in a Notes
Certificate and information in the Notes Register, the information in the Notes Register will prevail.
Stocks of blank Notes Certificates. The Issuer shall execute and deliver to the Administrative Agent such
2.08
number of blank Notes Certificates, duly signed by it, as the Administrative Agent may from time to time
reasonably require.
2.09 Delivery of replacements. Subject to receipt of sufficient blank Notes Certificates, the Administrative
Agent shall, upon and in accordance with the instructions of the Issuer (which instructions may, without
limitation, include terms as to the payment of expenses and as to
39
evidence, security and indemnity), complete, authenticate and deliver replacement Notes Certificates.
2.10 Replacement Notes Certificates. The Administrative Agent shall not deliver or issue any replacement
Notes Certificate:
(a)
if the Notes Certificate being replaced has been mutilated or defaced otherwise than against the
surrender of the same; and
(b)
until the claimant of the Notes Certificate has:
(i)
provided to the Administrative Agent such evidence, security and indemnity as the Issuer
and/or Administrative Agent may reasonably require; and
(ii)
paid such costs and expenses as may be incurred in connection with such replacement.
2.11 Replacements to be numbered. Each replacement Notes Certificate shall bear a unique serial number.
2.12 Cancellation and destruction. The Administrative Agent shall cancel and destroy each mutilated or
defaced Notes Certificate surrendered to it in respect of which a replacement Notes Certificate has been delivered.
2.13 Notification. The Administrative Agent shall notify the Issuer of the delivery by it of any replacement
Notes Certificate surrendered to it in respect of which a replacement Notes Certificate has been delivered.
2.14 Legend. The Notes may only be transferred or disposed of in compliance with applicable state and federal
securities Laws. For so long as such restrictions apply, the Noteholder agrees to the imprinting of a legend in the
Note Register and on the Notes in the following form: THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER THE SECURITIES LAWS OF
CERTAIN STATES, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, CHARGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD IN ACCORDANCE WITH RULE 144
UNDER THE ACT.
SECTION 3
PAYMENTS, REDEMPTION AND INTEREST
3.01
Payments and Redemption Generally; Application.
(a)
There will be no scheduled redemptions of principal on the Notes prior to the Maturity Date.
40
(b)
On the Maturity Date, the Issuer shall redeem the entire remaining outstanding principal amount of
the Notes at par in full and in cash.
(c)
The Issuer agrees that all amounts payable hereunder or under any other Notes Document, whether
in respect of any Notes, fees or interest accrued or accruing thereon, or any other Obligations, shall be paid, repaid
and prepaid, as the case may be, solely in Dollars and no other currency pursuant to the terms of this Section 3.
Except as otherwise provided in this Agreement, proceeds of each payment (including each redemption of Notes)
by the Issuer shall be, and shall be deemed to be, made ratably to the Noteholders in accordance with their
respective Proportionate Shares.
3.02
Interest.
(a)
Interest Generally. The outstanding principal amount of the Notes, as well as the amount of all
other outstanding Obligations, shall accrue interest at the Interest Rate on and from the Closing Date. The
Administrative Agent’s determination of the Interest Rate shall be binding on the Issuer, its Subsidiaries and the
Noteholders in the absence of manifest error.
(b)
Default Interest. Notwithstanding the foregoing, unless the Administrative Agent otherwise agrees
in writing, upon the occurrence and during the continuance of any Event of Default, the Applicable Margin shall
increase automatically by three percent (3.0%) per annum (the Interest Rate, as increased pursuant to this
Section 3.02(b), being the “Default Rate”). If any Obligation is not paid when due under any applicable Notes
Document, the amount thereof shall accrue interest at the Default Rate. For the avoidance of doubt, the Default
Rate shall not be cumulative and no more than three percent (3.00%) per annum can be applicable to the Notes or
any past due Obligation at any time, and further for the avoidance of doubt, once an Event of Default is waived by
the Administrative Agent or the Majority Noteholders, the Default Rate shall cease to apply.
(c)
Interest Payment Dates. Accrued interest on the Notes shall be payable in cash, in arrears, on
each Payment Date with respect to the most recently completed Interest Period, and upon the payment or
redemption of the Notes (on the principal amount being so paid or redeemed); provided that interest payable at the
Default Rate, or any accrued interest not paid on or before the Maturity Date, shall be payable from time to time
in cash on the Administrative Agent’s demand until paid in full.
(d)
Conforming Changes. In connection with the use or administration of One-Month Term SOFR,
the Administrative Agent will have the right to make Conforming Changes from time to time and,
notwithstanding anything to the contrary herein or in any other Notes Document, any amendments implementing
such Conforming Changes will become effective without any further action or consent of any other party to this
Agreement or any other Notes Document. The Administrative Agent will promptly notify the Issuer and the
Noteholders of the effectiveness of any Conforming Changes in connection with the use or administration of One-
Month Term SOFR.
(e)
Compensation for Loss. In the event of the payment or redemption of any principal of any Note
other than on the last day of the Interest Period applicable thereto (including as a result of an Event of Default),
then, in any such event, the Issuer shall compensate each
41
Noteholder for any reasonable and documented loss, cost and expense attributable to such event, including any
reasonable and documented loss, cost or expense arising from the liquidation or redeployment of funds. A
certificate of any Noteholder including documentary evidence of any amount or amounts that such Noteholder is
entitled to receive pursuant to this Section shall be delivered to the Issuer and shall be conclusive absent manifest
error. The Issuer shall pay such Noteholder the amount shown as due on any such certificate within 30 days after
receipt thereof.
(f)
Listing and Co-operation Obligations. The parties agree to co-operate in good faith to ensure that
the Notes are listed on a Recognised Stock Exchange promptly after the date of this Agreement, and to use
commercially reasonable best efforts to assist the Obligors to obtain and maintain a listing of such Notes on a
Recognised Stock Exchange such that the exemption from UK withholding tax under section 882 of the UK ITA
(“QEB Exemption”) applies. If the Notes are not listed on a Recognised Stock Exchange within six months after
the date of this Agreement, or if the QEB Exemption is otherwise unavailable, each Noteholder shall use all
commercially reasonable best efforts to ensure that the Issuer is able to make payments to that Noteholder, to the
maximum extent possible, without a UK Tax Deduction, including the completion of any procedural formalities
necessary for the Issuer to obtain authorization to make such payments without a UK Tax Deduction; provided,
however, that notwithstanding anything to the contrary in this Agreement, (i) Perceptive Credit Holdings III, LP
shall not be obligated to take any actions that would (x) disclose the identity of its partners, or (y) be
disadvantageous to its interests hereunder or under any other Notes Document in any material respect, and (ii) as
provided pursuant to Section 14.03 hereof, the Issuer shall reimburse Perceptive Credit Holdings III, LP for all
reasonable costs and expenses incurred by it in connection with actions taken by it pursuant to this Section
3.02(f). Any conversion of the existing indebtedness which shall comprise the Notes issued under this Agreement
or any equivalent transaction will be conducted pursuant to a valid exemption from the registration and prospectus
delivery requirements under the Securities Act and the qualification requirements under applicable state and
foreign Law and otherwise in compliance with the securities Laws of the United States. Any costs arising in
connection with the listing shall be borne by the Obligors.
(g)
Interest Deferral. Notwithstanding any other provision of this Agreement, the payment of any
interest in respect of the Notes shall automatically be deferred, at no additional cost to the Obligors, in respect of
all Payment Dates, until the first Payment Date following the earlier of: (i) the date the Issuer receives
confirmation that the Notes have been listed on a Recognised Stock Exchange; and (ii) February 2, 2023.
3.03 Early Redemption; Early Redemption Premium.
(a)
Optional Redemption of Notes
(i)
Subject to prior written notice pursuant to clause (a)(ii) below and the applicable portion of
the payment of the Early Redemption Fee pursuant to clause (c) below, the Issuer shall have the right to optionally
redeem, in whole or in part, the outstanding principal amount of the Notes at par on any Business Day (an “Early
Redemption Date”); provided that in addition to such redeemed principal amount and the Early Redemption Fee
applicable to such redeemed principal amount, the Issuer shall also make payment in full in cash on such Early
Redemption Date the applicable portion of all accrued but unpaid interest on the principal amount
42
of the Notes being redeemed (such aggregate amount of Early Redemption Fee, redeemed principal and accrued
interest being herein referred to as the “Early Redemption Price”).
(ii)
A notice of optional redemption shall be effective only if received by the Administrative
Agent not later than 2:00 p.m. (New York City time) on a date at least three (3) (but not more than five (5))
Business Days prior to the proposed Early Redemption Date. Each notice of optional redemption shall specify the
proposed Early Redemption Date (and may be revocable), the principal amount of the Notes to be prepaid, the
amount of accrued and unpaid interest that will be paid on the Early Redemption Date, and, in reasonable detail, a
calculation of the Early Redemption Fee payable on such Early Redemption Date in connection with such
proposed redemption.
(b) Mandatory Redemptions. Within ten (10) Business Days of the receipt of Net Cash Proceeds
from the occurrence of any Casualty Event or Asset Sale (other than any Asset Sale permitted pursuant to
Sections 9.09 (a), (b), (c), (d), (e), (g), (j) and (k)), to the extent that the aggregate amount of Net Cash Proceeds
received by Issuer and its Subsidiaries (and not paid to the Administrative Agent as a redemption of the Notes) in
respect of all such Casualty Events or Asset Sales, when taken together, exceeds $2,500,000 in any fiscal year, the
Issuer shall apply an amount equal to one hundred percent (100%) of the Net Cash Proceeds received by the
Issuer or any of its Subsidiaries with respect to such Casualty Event or Asset Sale, as the case may be with such
amount of Net Cash Proceeds being allocated, to (i) the redemption of principal outstanding under the Notes, and
(ii) the payment of accrued and unpaid interest on such principal amount of the Notes being prepaid and the
payment of the applicable portion of the Early Redemption Fee being paid. Such Net Cash Proceeds shall be
allocated to such redemption and payments such that the full amount of the applicable Early Redemption Price
shall be paid with such Net Cash Proceeds. Notwithstanding the foregoing, so long as no Event of Default has
occurred and is continuing or shall immediately result therefrom, if, within seven (7) Business Days following the
occurrence of any such Casualty Event or Asset Sale, a Responsible Officer of the Issuer delivers to the
Administrative Agent a notice to the effect that the Issuer or the applicable Subsidiary intends to apply the Net
Cash Proceeds from such Casualty Event or Asset Sale to repair, refurbish, restore, replace or rebuild the asset
subject to such Casualty Event or Asset Sale, then such Net Cash Proceeds of such Casualty Event or Asset Sale
may be applied for such purpose in lieu of such mandatory redemption otherwise required pursuant to this clause
(b) to the extent such Net Cash Proceeds of such Casualty Event or Asset Sale are actually applied for such
purpose; provided that, in the event that Net Cash Proceeds have not been so applied within one hundred eighty
(180) days following the occurrence of such Casualty Event or Asset Sale, the Issuer shall make a mandatory
redemption of the Notes in an aggregate amount equal to one hundred percent (100%) of the unused balance of
such Net Cash Proceeds received by the Issuer or any of its Subsidiaries with respect to such Casualty Event or
Asset Sale, as the case may be, together with payment of accrued and unpaid interest on the principal amount of
the Notes being so prepaid and the applicable Early Redemption Fee, with such amount of Net Cash Proceeds
being allocated to the redemption of principal, the payment of accrued and unpaid interest on such principal
amount of the Notes being redeemed and the payment of the applicable portion of the Early Redemption Fee
being paid such that the full payable with respect to such mandatory redemption is paid with such unused balance
of Net Cash Proceeds. Notwithstanding the foregoing, in respect of a Casualty Event relating to a Manufacturing
Facility, to the extent required by the basis of settlement under any policy of insurance relating to that
Manufacturing Facility or pursuant to the
43
terms of any lease under which the Issuer or any of its Subsidiaries holds an interest in that Manufacturing
Facility, the Issuer or the applicable Subsidiary shall apply moneys received under any policy of insurance in
respect of that Manufacturing Facility towards replacing, restoring or reinstating that Manufacturing Facility.
(c)
Early Redemption Fee. Without limiting the foregoing, whenever any redemption of Notes is
made hereunder pursuant to Section 3.03(a) or Section 3.03(b), acceleration or otherwise, the applicable portion
of the Early Redemption Fee being paid shall be due and payable in full in cash on the applicable Early
Redemption Date for such redemption.
(d)
Application. Proceeds of any redemption made pursuant to clauses (a) or (b) above shall be
applied in the following order of priority, with proceeds being applied to a succeeding level of priority only if
amounts owing pursuant to the immediately preceding level of priority have been paid in full in cash; provided
that all such redemptions made to Noteholders shall be applied pro rata in accordance with their respective
Proportionate Shares:
(i)
first, to the payment of that portion of the Obligations payable to the Administrative Agent
constituting fees, indemnities, costs, expenses, and other amounts then due and owing (including costs, Losses and
fees and disbursements and other charges of counsel payable under Section 14.03);
(ii)
second, to the payment of that portion of the Obligations payable to the Noteholders
constituting fees (other than any Early Redemption Fee), indemnities, expenses, and other amounts then due and
owing (including fees and disbursements and other charges of counsel payable under Section 14.03) ratably
among them in proportion to the respective amounts described in this clause (ii) payable to them;
(iii)
third, to the payment of any accrued and unpaid interest and any fees then due and owing;
(iv)
fourth, to the redemption of unpaid principal of the Notes of the Noteholders at par;
(v)
fifth, to the payment of any Early Redemption Fee then due and payable;
(vi)
sixth, to the payment in full of all other Obligations then due and payable to the
Administrative Agent and the Noteholders, ratably among them in proportion to the respective amounts described
in this clause (vi) payable to them; and
(vii)
seventh, to the Issuer or such other Persons as may lawfully be entitled to or directed by the
Issuer to receive the remainder.
3.04
Facility Fees. The Issuer (i) paid on the Closing Date, to the Administrative Agent (for the pro rata benefit
of the Noteholders) a fee equal to [***] (the “Tranche 1 Facility Fee”) by way of deduction from the proceeds of
the Tranche 1 Notes issued by the Issuer by the Noteholders and (ii) shall pay, on any Tranche 2 Notes
Subscription Date, to the Administrative Agent (for the pro rata benefit of the Noteholders) a fee equal to 0.75%
of the aggregate principal amount of the Tranche 2 Notes subscribed for on such Tranche 2 Issue Date (the
“Tranche 2 Facility Fee” and
44
together with the Tranche 1 Facility Fee, the “Facility Fees”). Upon receipt of payment from the Issuer, the
Administrative Agent will promptly thereafter distribute like funds relating to any such payment to the
Noteholders pro rata on the basis of each Noteholder’s Proportionate Share. Once paid by the Issuer, such Facility
Fees shall be non-refundable.
SECTION 4
PAYMENTS, ETC.
4.01
Payments.
(a)
Payments Generally. Each payment of principal, interest and other amounts to be made by the
Obligors under this Agreement or any other Notes Document shall be made (i) in Dollars, in immediately
available funds, without deduction, set off or counterclaim, to the applicable Noteholder to which such payment is
owed, to the deposit account of such Noteholder designated by it by notice to the Issuer, and (ii) not later than
2:00 p.m. (New York City time) on the date on which such payment is due (each such payment made after such
time on such due date shall be deemed to have been made on the next succeeding Business Day).
(b)
Application of Payments. All such payments referenced in clause (a) above shall be applied as set
forth in Section 3.03(d) above.
(c)
Non-Business Days. If the due date of any payment under this Agreement (whether in respect of
principal, interest, fees, costs or otherwise) would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day; provided that if such next succeeding Business Day would
fall after the Maturity Date, payment shall be made on the immediately preceding Business Day.
4.02 Computations. All computations of interest and fees hereunder shall be computed on the basis of a year of
three hundred and sixty (360) days and actual days elapsed during the period for which payable.
4.03
Set-Off.
(a)
Set-Off Generally. Upon the occurrence and during the continuance of any Event of Default, the
Administrative Agent, each of the Noteholders is hereby authorized at any time and from time to time, to the
fullest extent permitted by Law, to set off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any
time owing by the Administrative Agent, any Noteholder to or for the credit or the account of any Obligor against
any and all of the Obligations, whether or not such Person shall have made any demand and although such
obligations may be unmatured. Any Person exercising rights of set off hereunder agrees to promptly notify the
Issuer after any such set-off and application; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Administrative Agent, the Noteholders under this
Section 4.03 are in addition to other rights and remedies (including other rights of set-off) that such Persons may
have.
(b)
Exercise of Rights Not Required. Nothing contained in Section 4.03(a) shall require the
Administrative Agent or any Noteholder to exercise any such right or shall affect the
45
right of such Persons to exercise, and retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of any Obligor.
(c)
Payments Set Aside. To the extent that any payment by or on behalf of any Obligor is made to the
Administrative Agent or any Noteholder, or the Administrative Agent, any Noteholder or any Affiliate of the
foregoing exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent, or preferential, set aside or required (including pursuant to
any settlement entered into by the Administrative Agent, such Noteholder or such Affiliate in its discretion) to be
repaid to a trustee, receiver, examiner or any other party, in connection with any Insolvency Proceeding or
otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not
occurred.
(d)
To the extent permitted under applicable Law, any Participant acquiring a participation pursuant to
Section 14.05(e) hereof (as well as any Noteholder acquiring a participation pursuant to Section 14.05(e) hereof)
may exercise against the Obligors rights of setoff and counterclaim with respect to such participation as fully as if
such Participant was a direct creditor of the Obligor in the amount of such participation.
SECTION 5
YIELD PROTECTION, ETC.
5.01 Additional Costs.
(a)
Changes in Law Generally. If, on or after the Closing Date (or, with respect to any Noteholder,
such later date on which such Noteholder becomes party to this Agreement), the adoption of any Law, or any
change in any applicable Law, or any change in the interpretation or administration thereof by any court or other
Governmental Authority charged with the interpretation or administration thereof, or compliance by the
Administrative Agent or any of the Noteholders (or the office to which any of its Notes are booked) with any
request or directive (whether or not having the force of Law) of any such Governmental Authority, shall impose,
modify or deem applicable any reserve (including any such requirement imposed by the Board of Governors of
the Federal Reserve System), special deposit, contribution, insurance assessment or similar requirement, in each
case that becomes effective after the Closing Date (or, with respect to any Noteholder, such later date on which
such Noteholder becomes party to this Agreement) against assets of, deposits with or for the account of, or credit
extended by, a Noteholder (or its office to which any of its Notes are booked) or other Recipient or shall impose
on a Noteholder (or the office to which any of its Notes are booked) or other Recipient any other condition
affecting the Notes or the Commitment, and the result of any of the foregoing is to increase the cost to such
Noteholder or such other Recipient of making or maintaining the Notes, or to reduce the amount of any sum
received or receivable by such Noteholder or other Recipient under this Agreement or any other Notes Document,
or subject any Noteholder to any Taxes on its Notes, Commitment or other obligations, or its deposits, reserves,
other liabilities or capital (if any) attributable thereto by an amount reasonably deemed by such Noteholder in
good faith to be material (other than (i) Indemnified Taxes, (ii) Taxes described in clauses (ii) and (iii) of the
definition of “Excluded Taxes”, (iii) Connection Income Taxes and (iv) any Bank Levy or any payment
attributable to, or
46
liability arising as a consequence of, a Bank Levy), then the Issuer shall pay to such Noteholder within three (3)
Business Days after written demand such additional amount or amounts as will compensate such Noteholder for
such increased cost or reduction.
(b)
Change in Capital Requirements. If a Noteholder shall have determined that, on or after the
Closing Date (or, with respect to any Noteholder, such later date on which such Noteholder becomes party to this
Agreement), the adoption of any applicable Law regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy (whether or not having the force of
Law) of any such Governmental Authority, in each case that becomes effective after the Closing Date (or, with
respect to any Noteholder, such later date on which such Noteholder becomes party to this Agreement), has or
would have the effect of reducing the rate of return on capital of a Noteholder (or its parent) as a consequence of a
Noteholder’s obligations hereunder or the Notes to a level below that which a Noteholder (or its parent) could
have achieved but for such adoption, change, request or directive by an amount reasonably deemed by it to be
material, then the Issuer shall pay to such Noteholder on demand such additional amount or amounts as will
compensate such Noteholder (or its parent) for such reduction.
(c)
Notification by Noteholder. Each Noteholder shall promptly notify the Issuer of any event of
which it has knowledge, occurring after the Closing Date (or, with respect to any Noteholder, such later date on
which such Noteholder becomes party to this Agreement), which will entitle such Noteholder to compensation
pursuant to this Section 5.01. Before giving any such notice pursuant to this Section 5.01(c) such Noteholder shall
designate a different office for booking its Notes if such designation (x) will, in the reasonable judgment of such
Noteholder, avoid the need for, or reduce the amount of, such compensation and (y) will not, in the reasonable
judgment of such Noteholder, be materially disadvantageous to such Noteholder. A certificate of such Noteholder
claiming compensation under this Section 5.01, setting forth in reasonable detail the additional amount or
amounts to be paid to it hereunder and also setting forth in reasonable detail the basis for calculating the additional
amounts claimed to be owed to such Noteholder, shall be conclusive and binding on the Issuer in the absence of
manifest error.
(d)
Delays in Requests. Failure or delay on the part of any Noteholder to demand compensation
pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Noteholder’s right to
demand such compensation; provided that the Issuer shall not be required to compensate a Noteholder pursuant to
the foregoing provisions of this Section for any increased costs unless the Noteholder notifies the Issuer within
ninety (90) days following the receipt by such Noteholder of its audited annual financial statements of the change
in Law giving rise to such increased costs or reductions and of such Noteholder’s intention to claim compensation
therefor.
(e)
Other Changes. Notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in
connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International
Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United
States or foreign regulatory
47
authorities, in each case pursuant to Basel III, shall in each case be deemed to constitute a change in Law for all
purposes of this Section 5.01, regardless of the date enacted, adopted or issued.
5.02
Illegality. Notwithstanding any other provision of this Agreement, in the event that on or after the Closing
Date (or, with respect to any Noteholder, such later date on which such Noteholder becomes party to this
Agreement), the adoption of or any change in any applicable Law or in the interpretation or application thereof by
any competent Governmental Authority shall make it unlawful for a Noteholder or the office to which any of its
Notes are booked to perform any of its obligations or to subscribe for or maintain its participation in any Note
(and, in the opinion of such Noteholder, the designation of a different office for the booking of its Notes would
either not avoid such unlawfulness or would be disadvantageous to such Noteholder), then such Noteholder shall
promptly notify the Issuer thereof, following which (i) such Noteholder’s Commitment shall be suspended until
such time as such Noteholder may again subscribe for and maintain its participation in the Notes hereunder and
(ii) if such Law shall so mandate, the Notes shall be redeemed by the Issuer on or before such date as shall be
mandated by such Law in an amount equal to the Early Redemption Price applicable on such Early Redemption
Date in accordance with Section 3.03(a).
5.03 Taxes.
(a)
Payments Free of Taxes. Any and all payments by or on account of any Obligations shall be made
without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as
determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding
of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be
entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable Law and, if such Tax is an Indemnified Tax, then
the sum payable by such Obligor shall be increased as necessary so that after such deduction or withholding has
been made (including such deductions and withholdings applicable to additional sums payable under this Section
5.03) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction
or withholding been made.
(b)
Payment of Other Taxes by the Issuer. The Issuer shall timely pay to the relevant Governmental
Authority in accordance with applicable Law, or at the option of the Administrative Agent or each Noteholder,
timely reimburse it for the payment of any Other Taxes.
(c)
Evidence of Payments. As soon as reasonably practicable after any payment of Taxes by the
Issuer to a Governmental Authority pursuant to this Section 5, the Issuer shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent.
(d)
Indemnification by the Issuer. The Issuer shall reimburse and indemnify each Recipient, within
ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes
imposed or asserted on or attributable to amounts payable under this Section 5) payable or paid by such Recipient
or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising
therefrom or with respect thereto,
48
whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority, but excluding, for the avoidance of doubt, any Indemnified Tax which is suffered or
incurred in respect of any Bank Levy, or any payment attributable to, or liability arising as a consequence of, a
Bank Levy. A certificate as to the amount of such payment or liability delivered to the Issuer by a Noteholder
(with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a
Noteholder shall be conclusive absent manifest error.
(e)
indemnify
the
Indemnification by the Noteholders. Each Noteholder shall severally
Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to
such Noteholder (but only to the extent that the Issuer has not already indemnified the Administrative Agent for
such Indemnified Taxes and without limiting the obligation of the Issuer to do so), (ii) any Taxes attributable to
such Noteholder’s failure to comply with the provisions of Section 14.05(g) relating to the maintenance of a
Participant Register, and (iii) any Excluded Taxes attributable to such Noteholder, in each case, that are payable or
paid by (or withheld from payments to) the Administrative Agent in connection with any Notes Documents, and
any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to any Noteholder by the Administrative Agent shall be conclusive absent manifest
error. Each Noteholder hereby authorizes the Administrative Agent to set off and apply any and all amounts at any
time owing to such Noteholder under any Notes Documents or otherwise payable by the Administrative Agent to
the Noteholder from any other source against any amount due to the Administrative Agent under this clause (e).
(f)
Status of Successors and Assignees.
(i)
Any Noteholder that is a successor or assignee of Perceptive Credit Holdings III, LP and
that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any
Notes Document shall deliver to the Issuer and the Administrative Agent at the time or times reasonably requested
by the Issuer or the Administrative Agent, such properly completed and executed documentation reasonably
requested by the Issuer or the Administrative Agent as will permit such payments to be made without withholding
or at a reduced rate of withholding. Notwithstanding anything to the contrary in the preceding sentence, the
completion, execution and submission of such documentation (other than such documentation set forth in
Section 5.03(f)(ii)) shall not be required if in such Noteholder’s reasonable judgment such completion, execution
or submission would subject such Noteholder to any material unreimbursed cost or expense or could materially
prejudice the legal or commercial position of such Noteholder. For the avoidance of doubt, notwithstanding
anything to the contrary in this Agreement, Perceptive Credit Holdings III, LP shall not be obligated to take any
actions that would disclose the identity of its partners.
(ii)
If a payment made to any Noteholder under any Notes Documents would be subject to U.S.
federal withholding Tax imposed by FATCA if such Noteholder were to fail to comply with the applicable
reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as
applicable), such Noteholder shall deliver to the Issuer and the Administrative Agent at the time or times
prescribed by Law and at such time or times
49
reasonably requested by the Issuer or the Administrative Agent such documentation prescribed by applicable Law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably
requested by the Issuer or the Administrative Agent as may be necessary for the Issuer and the Administrative
Agent to comply with their obligations under FATCA and to determine that such Noteholder has complied with
such Noteholder’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such
payment. Solely for purposes of this clause (ii), “FATCA” shall include any amendments made to FATCA after
the date of this Agreement.
Each Recipient agrees that if any form or certification it previously delivered expires or becomes obsolete or
inaccurate in any respect, it shall update such form or certification or promptly notify the Issuer and the
Administrative Agent in writing of its legal inability to do so.
(g)
Treatment of Certain Tax Benefits. If any party to this Agreement determines, in its sole
discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified
pursuant to this Section 5.03 (including by the payment of additional amounts pursuant to this Section 5.03), it
shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments
made under this Section 5.03 with respect to the Taxes giving rise to such refund), net of all out-of-pocket
expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such
indemnified party, shall repay to such indemnified party the amount paid over pursuant to this Section 5.03 (plus
any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such
indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to
the contrary in this Section 5.03(g), in no event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this Section 5.03(g) the payment of which would place the indemnified party in a
less favorable net after-Tax position than the indemnified party would have been in if Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the
indemnification payments or additional amounts with respect to such Tax had never been paid. This
Section 5.03(g) shall not be construed to require any indemnified party to make available its Tax returns (or any
other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
(h) Mitigation Obligations. If the Issuer is required to pay any Indemnified Taxes or additional
amounts to any Noteholder or to any Governmental Authority for the account of any Noteholder pursuant to
Section 5.01, then such Noteholder shall (at the request of the Issuer) use reasonable efforts to designate a
different office for subscribing for or booking its participation in the Notes hereunder or to assign and delegate its
rights and obligations hereunder to another of its offices, branches or Affiliates if, in the sole, reasonable judgment
of such Noteholder, such designation or assignment and delegation would (i) eliminate or reduce amounts payable
pursuant to Section 5.01, as the case may be, in the future, (ii) not subject such Noteholder to any unreimbursed
cost or expense and (iii) not otherwise be disadvantageous to such Noteholder. The Issuer hereby agrees to pay all
reasonable costs and expenses incurred by any Noteholder in connection with any such designation or assignment
and delegation.
(i)
United Kingdom Requirements.
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(i)
Subject to sub-paragraph (ii) below, a UK Treaty Noteholder (or a Noteholder which would
be a UK Treaty Noteholder upon the completion of any necessary procedural formalities) and each Withholding
Agent which makes a payment to which that Noteholder is entitled shall co-operate in completing any procedural
formalities necessary for that Withholding Agent to obtain authorization to make that payment without a UK Tax
Deduction.
(ii)
Each UK Treaty Noteholder (or a Noteholder which would be a UK Treaty Noteholder
upon the completion of any necessary procedural formalities): (A) which is a Noteholder as at the date of this
Agreement and that holds a passport under the UK DTTP Scheme, and which wishes that scheme to apply to this
Agreement, shall confirm its UK DTTP Scheme reference number and its jurisdiction of tax residence opposite its
name on Schedule 1; and (B) that becomes a Noteholder after the date of this Agreement and that holds a passport
under the UK DTTP Scheme, and which wishes that scheme apply to such Noteholder’s participation in this
Agreement, shall confirm its UK DTTP Scheme reference number and its jurisdiction of tax residence in the
documentation which it executes on becoming a party hereto as a Noteholder, and in each case under (A) and (B)
above, having done so, that Noteholder shall be under no further obligation pursuant to sub-paragraph (i) above.
(iii)
If a Noteholder has confirmed its UK DTTP Scheme reference number and its jurisdiction
of tax residence in accordance with sub-paragraph (i)(ii) above and:
in respect of that Noteholder; or
(A)
the Issuer making a payment to that Noteholder has not made an Issuer DTTP Filing
(B)
the Issuer making a payment to that Noteholder has made an Issuer DTTP Filing in
respect of that Noteholder but (1) that Issuer DTTP Filing has been rejected by HMRC, (2) HMRC has not given
the Issuer authority to make payments to that Noteholder without a UK Tax Deduction within 60 days of the date
of the Issuer DTTP Filing, or (3) HMRC has given authority for the Issuer to make payments to that Noteholder
without a UK Tax Deduction but such authority has subsequently been revoked, suspended or expired,
and in each case, the Issuer has notified that Noteholder in writing, then the applicable Noteholder
shall co-operate with the Issuer in completing any additional procedural formalities necessary for that Issuer to
obtain authorization to make that payment without a UK Tax Deduction.
(iv)
If a Noteholder has not confirmed its UK DTTP Scheme reference number and jurisdiction
of tax residence in accordance with sub-paragraph (i)(ii) above, no Withholding Agent shall make an Issuer DTTP
Filing or file any other form relating to the UK DTTP Scheme in respect of a Commitment by such Noteholder or
its participation in any advance unless the Noteholder otherwise agrees.
(v)
The Issuer shall, promptly on making any Issuer DTTP Filing, deliver a copy of that Issuer
DTTP Filing to the Administrative Agent for delivery to the relevant Noteholder.
51
(vi)
A UK Non-Bank Noteholder shall promptly notify the Administrative Agent if there is any
change in the position from that set out in the applicable UK Tax Confirmation.
(vii)
If the Administrative Agent receives a UK Tax Confirmation from a UK Non-Bank
Noteholder it shall promptly provide a copy of such UK Tax Confirmation to the Issuer.
(viii) The Issuer shall upon becoming aware that the Issuer must make a UK Tax Deduction (or
that there is any change in the rate or the basis of a UK Tax Deduction) notify the Administrative Agent
accordingly. Similarly, a Noteholder shall notify the Administrative Agent on becoming aware that a Withholding
Agent must make a UK Tax Deduction (or that there is any change in the rate or the basis of a UK Tax
Deduction). If the Administrative Agent receives such notification from a Noteholder, it shall promptly notify the
Issuer.
(j)
Noteholder Status Confirmation.
(i)
Each Noteholder which becomes a party after the date of this Agreement shall indicate in
the documentation which it executes on becoming a party which of the following categories it falls into: (A) not a
UK Qualifying Noteholder; (B) a UK Qualifying Noteholder (other than a UK Treaty Noteholder); or (C) a UK
Treaty Noteholder (or a Noteholder which would be a UK Treaty Noteholder upon the completion of any
necessary procedural formalities).
(ii)
If a Noteholder fails to indicate its status in respect of the Issuer in accordance with
paragraph (j)(i) above, then such Noteholder shall be treated for the purposes of this Agreement (including by
each Withholding Agent) as if it is not a UK Qualifying Noteholder until such time as it notifies the
Administrative Agent which categories apply (and the Administrative Agent, upon receipt of such notification,
shall promptly inform the Issuer). For the avoidance of doubt, the documentation which a Noteholder executes on
becoming a Party as a Noteholder shall not be invalidated by any failure of such Noteholder to comply with this
clause 5.03(j).
(iii) Where a Noteholder will become be a UK Treaty Noteholder only upon the completion of
certain procedural formalities, it shall be treated for the purposes of this Agreement (including by each
Withholding Agent) as if it is not a UK Qualifying Noteholder until such time as it notifies the Administrative
Agent that such procedural formalities are complete (and the Administrative Agent, upon receipt of such
notification, shall promptly inform the Issuer).
(k)
VAT.
(i)
All amounts expressed to be payable under any Notes Documents by any party to any
Secured Party which (in whole or in part) constitute the consideration for a supply or supplies for VAT purposes
shall be deemed to be exclusive of any VAT which is chargeable on such supply or supplies, and accordingly,
subject to paragraph (ii) below, if VAT is or becomes chargeable on any supply made by any Secured Party to any
party under any Notes Documents and:
that party shall pay to the Secured Party (in addition to and at the same time
(A)
such Secured Party is required to account to the relevant tax authority for the VAT,
52
as paying any other consideration for such supply) an amount equal to the amount of such VAT (and such Secured
Party shall promptly provide an appropriate VAT invoice to such party); or
(B)
if such party is required to directly account for such VAT under the reverse charge
procedure provided for by article 44 of the Council Directive 2006/112/EC, or section 7A of the Value Added Tax
Act 1994 of the United Kingdom, in each case, as amended, or any relevant VAT provisions of the jurisdiction in
which such party received such supply, then such party shall account for the VAT at the appropriate rate (and the
relevant Secured Party must promptly provide an appropriate VAT invoice to such party stating that the amount is
charged in respect of a supply that is subject to VAT but that the reverse charge procedure applies).
(ii)
If VAT is or becomes chargeable on any supply made by any Secured Party (the “VAT
Supplier”) to any other Secured Party (the “VAT Recipient”) under any Notes Documents, and any party other
than the VAT Recipient (the “Relevant Party”) is required by the terms of any Notes Documents to pay an amount
equal to the consideration for that supply to the VAT Supplier (rather than being required to reimburse or
indemnify the VAT Recipient in respect of that consideration):
(iii)
where the VAT Supplier is the person required to account to the relevant tax authority for
the VAT, the Relevant Party must also pay to the VAT Supplier (at the same time as paying that amount) an
additional amount equal to the amount of VAT. The VAT Recipient must (where this sub-paragraph (ii)(A) applies)
promptly pay to the Relevant Party an amount equal to any credit or repayment the VAT Recipient receives from
the relevant tax authority which the VAT Recipient reasonably determines relates to the VAT chargeable on that
supply; and
(iv)
where the VAT Recipient is the person required to account to the relevant tax authority for
the VAT, the Relevant Party must promptly, following demand from the VAT Recipient, pay to the VAT Recipient
an amount equal to the VAT chargeable on that supply but only to the extent that the VAT Recipient reasonably
determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
(v) Where any Notes Documents require any party to reimburse or indemnify a Secured Party
for any cost or expense in connection with such Notes Documents, the reimbursement or indemnity (as the case
may be) shall be for the full amount of such cost or expense, including such part thereof as represents VAT, save to
the extent that such Secured Party reasonably determines that it is entitled to credit or repayment in respect of
such VAT from the relevant tax authority.
(vi)
Any reference in this clause 5.03(k) to any party shall, at any time when such party is
treated as a member of a group or unity (or fiscal unity) for VAT purposes, include (where appropriate and unless
the context otherwise requires) a reference to the representative member of such group at such time as making the
supply, or (as appropriate) receiving the supply, under the grouping rules (as provided for in Article 11 of Council
Directive 2006/112/EC (or as implemented by the relevant member state of the European Union) or any other
similar provision in any jurisdiction which is not a member state of the European Union, including, for the
avoidance of doubt, in accordance with section 43 of the UK Value Added Tax Act 1994) so that a reference to a
party shall be construed as a reference to that party or the relevant group or unity (or fiscal
53
unity) of which that party is a member for VAT purposes at the relevant time or the relevant representative
member (or head) of that group or unity (or fiscal unity) at the relevant time (as the case may be).
(vii)
In relation to any supply made by a Secured Party to any party under a Notes Document, if
reasonably requested by such Secured Party, that party must as promptly as reasonably practicable provide such
Secured Party with details of that party’s VAT registration and such other information as is reasonably requested in
connection with such Secured Party’s VAT reporting requirements in relation to such supply.
(l)
Hybrid Mismatch Rules. Each Noteholder agrees to use commercially reasonable efforts to assist
the Issuer in preparing an analysis of available interest deductions to the Issuer under the UK hybrid mismatch
rules contained in Part 6A of the Taxation (International and Other Provisions) Act 2010 at Issuer’s cost;
provided, however, that notwithstanding anything to the contrary in this Agreement, no Noteholder shall be
obligated to take any actions that would disclose the identity of its partners.
(m)
Survival. Each party’s obligations under this Section 5.03 shall survive the resignation or
replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Noteholder, the
termination of the Commitments and the repayment, satisfaction or discharge of all Obligations under any Notes
Documents.
SECTION 6
CONDITIONS PRECEDENT
6.01 Conditions to the issuance and subscription of the Tranche 1 Notes. The obligation of the Noteholders
to subscribe for the Tranche 1 Notes on the Closing Date was subject to the execution and delivery of this
Agreement by the parties hereto, the delivery of a funds flow memorandum summarizing, in reasonable detail, the
use of proceeds of the Tranche 1 Notes, and the prior or concurrent satisfaction (or waiver thereof by the
Administrative Agent) of each of the conditions precedent set forth below in this Section 6.01, each of which was
satisfied or waived as of the Closing Date.
(a)
Secretary’s Certificate, Etc. The Administrative Agent received from each Obligor party to a
Notes Document on the Closing Date:
(i)
a copy of a good standing certificate or the equivalent thereof, dated a date reasonably close
to the Closing Date, for each such Person; and
(ii)
a certificate, dated as of the Closing Date, duly executed and delivered by such Person’s
director, secretary or assistant secretary, managing member, general partner, authorized signatory or equivalent, as
to:
resolutions of each such Person’s Board then in full force and effect authorizing the
execution, delivery and performance of each Notes Document and the Transactions, to be executed and delivered
by such Person;
(A)
54
the incumbency and signatures of those of its officers, directors, managing member
or general partner or equivalent authorized to act with respect to each Notes Document to be executed and
delivered by such Person; and
(B)
true and complete copies of each Organic Document of such Person and, in relation
to any Person that is a Cayman Islands exempted company or limited liability company, its register of directors
and officers and register of mortgages and charges;
(C)
(iii)
solely with respect to the Irish Subsidiary Guarantor:
the registration of the transfer of secured shares and does not apply any company lien over shares; and
(A)
evidence that the constitution of such Irish Subsidiary Guarantor does not restrict
Documents by it would not breach Sections 82 and 239 of the Irish Companies Act;
(B)
a certificate from such Subsidiary Guarantor certifying that entry into the Notes
which certificates were in form and substance reasonably satisfactory to the Administrative Agent and upon which
the Administrative Agent and the Noteholders may conclusively rely until they shall have received a further
certificate of the director, secretary, assistant secretary, managing member, general partner or equivalent of any
such Person cancelling or amending the prior certificate of such Person.
(b)
Information Certificate. The Administrative Agent received a fully completed Information
Certificate, in form and substance reasonably satisfactory to the Administrative Agent, dated as of the Closing
Date, duly executed and delivered by a Responsible Officer of the Issuer, which was true and correct in all
material respects as of the Closing Date. All documents and agreements required to be appended to the
Information Certificate, if any, were in form and substance reasonably satisfactory to the Administrative Agent,
were executed and delivered by the requisite parties and were in full force and effect.
(c)
Closing Date Certificate. The following statements were true and correct, and the Administrative
Agent received a certificate, dated as of the Closing Date in form and substance reasonably satisfactory to the
Administrative Agent, duly executed and delivered by a Responsible Officer of the Issuer certifying that: (i) both
immediately before and after the issuance of the Tranche 1 Notes on the Closing Date, (x) the representations and
warranties set forth in each Notes Document qualified by materiality, Material Adverse Effect or the like were, in
each case, true and correct, (y) the representations and warranties set forth in each Notes Document not qualified
by materiality, Material Adverse Effect or the like were, in each case, true and correct in all material respects, and
(z) no Event of Default had occurred and was continuing, or could reasonably be expected to result from the
issuance of the Tranche 1 Notes, or the consummation of any Transactions contemplated to occur on the Closing
Date, and (ii) all of the conditions set forth in this Section 6.01 had been satisfied (except to the extent waived in
writing by the Administrative Agent). All documents and agreements required to be appended to the certificate
delivered pursuant to this Section 6.01(c), if any, were in form and substance reasonably satisfactory to the
Administrative Agent, were executed (if applicable) and delivered by the requisite parties, and were in full force
and effect.
55
(d)
(e)
[Reserved].
Financial Information, Etc. The Administrative Agent received:
(i)
audited consolidated financial statements of the Issuer and its Subsidiaries for the fiscal
year ended December 31, 2021; and
(ii)
unaudited consolidated balance sheets of the Issuer and its Subsidiaries for each fiscal
quarter ended after December 31, 2021 and at least thirty (30) Business Days prior to the Closing Date, together
with the related consolidated statement of operations, shareholder’s equity and cash flows for each such fiscal
quarter.
(f)
Minimum Liquidity Compliance. The Administrative Agent received evidence reasonably
satisfactory to it that, immediately after giving effect to the issuance of the Tranche 1 Notes on the Closing Date,
the Issuer was in compliance with the covenant set forth in Section 10.01.
(g)
Closing Date Warrant Certificates. The Administrative Agent received (i) an executed
counterpart of a Warrant Certificate, exercisable into 400,000 shares of the Issuer’s ordinary shares with a per
share exercise price of $15.00 and (ii) an executed counterpart of a Warrant Certificate, exercisable into 300,000
shares of the Issuer’s ordinary shares with a per share exercise price of $20.00, in each case duly executed and
delivered by the Issuer.
(h)
Insurance. The Administrative Agent received certificates of insurance evidencing that the
insurance required to be maintained pursuant to Section 8.05 was at the Closing Date in full force and effect,
together with endorsements naming the Administrative Agent, for the benefit of the Noteholders, as additional
insured and loss payee thereunder, in each case, in form and substance reasonably satisfactory to the
Administrative Agent.
(i)
Solvency. The Administrative Agent received a solvency certificate substantially in the form of
Exhibit I, duly executed and delivered by the chief financial or other Responsible Officer of the Issuer, dated as
of the Closing Date, in form and substance reasonably satisfactory to the Administrative Agent.
(j)
Security Documents. The Administrative Agent received executed counterparts of all Security
Documents, each dated as of the Closing Date, duly executed and delivered by the applicable Obligors, together
with:
(i)
The delivery of all certificates (in the case of Equity Interests that are securities (as defined
in the UCC)) evidencing the issued and outstanding capital securities of the Subsidiary Guarantors that were
required to be pledged under any Security Document, which certificates in each case were accompanied by
undated instruments of transfer duly executed in blank, or, in the case of Equity Interests that were uncertificated
securities (as defined in the UCC), confirmation and evidence satisfactory to the Administrative Agent and the
Noteholders that the security interest required to be pledged therein under any Security Document had been
transferred to and perfected by the Administrative Agent for the benefit of the Secured Parties in accordance with
Articles 8 and 9 of the NY UCC and all Laws otherwise applicable to the perfection of the pledge of such Equity
Interests;
56
(ii)
financing statements naming each Obligor as a debtor and the Administrative Agent as the
secured party, or other similar instruments, registrations, or documents, in each case suitable for filing, filed under
the UCC (or equivalent Law) of all jurisdictions as was reasonably necessary to perfect the Liens of the Secured
Parties pursuant to any Security Document;
(iii)
evidence that the Minimum Liquidity Account and all deposit accounts, lockboxes,
disbursement accounts, investment accounts (or other similar cash or bank accounts) of the Subsidiary Guarantors
were at the Closing Date Controlled Accounts;
(iv)
evidence that all such Controlled Accounts were subject to one or more account control
agreements, or the equivalent in a foreign law jurisdiction, in favor of, and satisfactory in form and substance to,
the Administrative Agent; and
(v)
all notices of assignment, share deliverables and other ancillary documents necessary to
perfect the Liens of the Secured Parties pursuant to any Foreign Collateral Security Document.
(k)
Lien Searches. The Administrative Agent was satisfied with scope and results of Lien searches (or
equivalents) regarding the Collateral made within thirty (30) days prior to the Closing Date.
(l)
Opinions of Counsel. The Administrative Agent received one or more legal opinions, dated the
Closing Date and addressed to the Administrative Agent and the Noteholders, from independent legal counsel to
the Issuer, in each case, in form and substance reasonably acceptable to the Administrative Agent.
(m) Material Adverse Change. No Material Adverse Change had, as at the Closing Date, occurred
since December 31, 2021.
(n)
Anti-Terrorism Laws. The Administrative Agent received, as applicable, all documentation and
other information required by bank regulatory authorities requested by the Administrative Agent at least three (3)
Business Days prior to the Closing Date with respect to applicable “know your customer” and anti-money
laundering rules and regulations, including the Patriot Act.
(o)
Fees, Expenses, Etc. The Administrative Agent received for its account and the account of each
Noteholder, the Tranche 1 Facility Fee, together with payment and reimbursement of all other fees, costs and
expenses due and payable pursuant to the Proposal Letter and Section 14.03, including all closing costs and fees
and all unpaid reasonable expenses of the Administrative Agent and the Noteholders incurred as of the Closing
Date in connection with the Transactions in excess of the Expense Deposit (as defined in the Proposal Letter)
(including the Administrative Agent’s and the Noteholders’ legal fees and expenses).
(p)
Independent Appraisal of Manufacturing Facilities. The Administrative Agent received a
satisfactory initial draft valuation and appraisal report, prepared by a reputable independent appraiser (the
“Independent Appraiser”) instructed and appointed by the
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Administrative Agent, which report was in scope and substance reasonably satisfactory to the Administrative
Agent.
(q)
Certificates of Title and Foreign Real Property Security Documents. The Issuer delivered to
the Administrative Agent:
(i)
a duly executed Foreign Real Property Security Document in respect of each of the London
Manufacturing Facility and the Shannon Manufacturing Facility;
(ii)
copies of all lease and title documents for the London Manufacturing Facility in electronic
format;
(iii)
a clear (save in respect of pending applications which have been disclosed in the Certificate
of Title) Land Registry Priority Search (OS1) in favour of the Administrative Agent against the title number of the
London Manufacturing Facility and: (A) giving not less than 20 Business Days’ priority beyond the date of the
relevant Security Document; and (B) showing no adverse entries (save in respect of pending applications which
have been disclosed in the relevant Certificate of Title);
(iv)
the Certificates of Title;
(v)
an overview report prepared by the Administrative Agent’s solicitors on the Certificates of
Title addressed to the Secured Parties;
(vi)
all necessary HM Land Registry application forms in relation to the charging of the London
Manufacturing Facility in favour of the Administrative Agent (including a form to note the obligation to make
further advances and a form to register the restriction contained in the relevant Security Document), duly
completed, accompanied by payment of the applicable HM Land Registry fees or an acceptable undertaking in
relation to the same;
(vii)
copies of all Authorisations (if any) required in connection with the charging of the London
Manufacturing Facility and the Shannon Manufacturing Facility in favour of the Administrative Agent;
(viii)
all title documents relating to the Shannon Manufacturing Facility or an acceptable
undertaking to hold the same to the order of the Secured Parties;
(ix)
all necessary Property Registration Authority forms in relation to the charging of the
Shannon Manufacturing Facility in favour of the Administrative Agent;
(x)
an acceptable undertaking to assist with Property Registration Authority queries relating to
the registration of the Shannon Manufacturing Facility in the name of the Irish Subsidiary Guarantor and the
registration of the charge over the Shannon Manufacturing Facility in favour of the Administrative Agent;
(xi)
undertaking from of the Irish Subsidiary Guarantor to assist with Property Registration
Authority queries relating to the registration of the Shannon Manufacturing Facility
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in the name of the Irish Subsidiary Guarantor and the registration of the charge over the Shannon Manufacturing
Facility in favour of the Administrative Agent;
(xii) Clear or duly explained and certified Land Registry / Registry of Deeds and planning
searches in respect of the Shannon Manufacturing Facility showing no adverse acts appearing;
(xiii) Sworn Family Home Declaration in relation to the Shannon Manufacturing Facility;
(xiv) Sworn Declaration re compliance with leasehold covenants in relation to the Shannon
Manufacturing Facility; and
(xv)
over dealing D2022LR029852T.
Letter from ALG addressed to the Land Registry authorising William Fry to take control
In this Section, an “acceptable undertaking” means a solicitor’s undertaking from a firm of solicitors
regulated by the Solicitors Regulation Authority or the Irish Law Society (as applicable) and approved for this
purpose by the Administrative Agent and in form and substance reasonably satisfactory to the Administrative
Agent.
(r)
Process Agent. Evidence that any process agent referred to in clause 21 (Service of process) of the
English Law Security Agreement had accepted its appointment.
6.02 Conditions to the issuance and sale of the Tranche 2 Notes. During the Tranche 2 Notes Draw Period,
the Issuer may request that the Noteholders subscribe for the Tranche 2 Notes in an aggregate principal amount of
$25,000,000; provided that the making of the subscription for the Tranche 2 Notes shall be subject to the prior
consent of the Majority Noteholders in their sole discretion after receiving such request from the Issuer, and no
Noteholder shall have any commitment to make or participate in the subscription for the Tranche 2 Notes unless
the Majority Noteholders have provided such consent in writing to the Issuer, the Administrative Agent and the
other Noteholders hereunder. In the event (and only in the event) the Majority Noteholders so consent to subscribe
for the Tranche 2 Notes, in whole or in part, as provided above, the obligation of the Noteholders to fund their
respective Proportionate Shares of the subscription for the Tranche 2 Notes at their sole discretion shall be subject
to the delivery of a Notes Subscription Request by the Issuer, the delivery of a funds flow memorandum by the
Issuer summarizing, in reasonable detail, the use of proceeds of the Tranche 2 Facility, and the prior or concurrent
satisfaction (or waiver thereof by the Administrative Agent) of such customary additional conditions as the
Majority Noteholders may reasonably request (including some or all conditions of the type set forth in Section
6.01).
SECTION 7
REPRESENTATIONS AND WARRANTIES
The Issuer and each other Obligor hereby jointly and severally represent and warrant to the Administrative
Agent and each Noteholder that:
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7.01
Power and Authority. The Issuer and each of its Subsidiaries (i) is duly organized or incorporated, as
applicable, and validly existing under the laws of its jurisdiction of organization or incorporation, as applicable,
(ii) has all requisite corporate or other power, and has all Governmental Approvals necessary to own or lease its
assets and carry on its business as now being or as proposed to be conducted, including all Healthcare Permits,
other than could not reasonably be expected to result in a Material Adverse Effect, (iii) is qualified to do business
and is in good standing (or equivalent) in all jurisdictions in which the nature of the business conducted by it
makes such qualification necessary and where failure so to qualify, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, and (iv) has full power, authority and legal right to
execute, deliver and perform its obligations under each of the Notes Documents to which it is a party and, in the
case of the Issuer, to issue the Notes hereunder.
7.02 Authorization; Enforceability. Each Transaction to which an Obligor is a party (or to which it or any of
its assets or properties is subject) are within such Obligor’s corporate or other powers and have been duly
authorized by all necessary corporate action including, if required, approval by all necessary holders of Equity
Interests. This Agreement has been duly executed and delivered by such Obligor and constitutes, and each of the
other Notes Documents to which it is a party when executed and delivered by such Obligor, will constitute, a
legal, valid and binding obligation of such Obligor, enforceable against such Obligor in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors’ rights; (ii) the application of general
principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);
and (iii) solely in respect of the English Guarantor and the Irish Subsidiary Guarantor, the Legal Reservations or
the Perfection Requirements.
7.03 Governmental and Other Approvals for Execution and Delivery of the Notes Document, etc.; No
Conflicts. No authorization or approval or other action by, and no notice to or filing with, any Governmental
Authority or any other Person (other than those that have been duly obtained or made and which are in full force
and effect) is required in connection with the due execution, delivery or performance by, any Obligor of any Notes
Document to which it is a party, except for such approvals, consents, exemptions, authorizations, actions or
notices (including such filings and recordings that have been or will be made on the Closing Date in respect of
perfecting or recording the Liens created pursuant to the Security Documents) that have been duly obtained, taken
or made and that are in full force and effect. None of the Transactions will (i) violate or conflict with any Law,
other than any such violation that could not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect, (ii) violate or conflict with any Organic Document of the Issuer or any of its
Subsidiaries, (iii) violate or conflict with any Governmental Approval of any Governmental Authority binding
upon the Issuer or any of its Subsidiaries other than any such violation that could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect, (iv) violate or result in a default under
any Material Agreement other than any such violation that could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect, or (v) result in the creation or imposition of any Lien (other
than Permitted Liens) on any asset of such Obligor. The Issuer, its Subsidiaries and their respective properties and
businesses are in compliance in all material respects with all applicable Laws (including Healthcare Laws) and
Governmental Approvals applicable to such Person and its properties or businesses, as the case may be.
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7.04
Financial Statements; Material Adverse Change.
(a)
Financial Statements. The Issuer has heretofore furnished to the Administrative Agent and the
Noteholders certain consolidated financial statements as provided for in Section 6.01(e). Such financial
statements, and all other financial statements delivered by the Issuer pursuant hereto (including Section 6.01)
present fairly, in all material respects, the consolidated financial position and results of operations and cash flows
of the Issuer and its Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-
end audit adjustments and the absence of footnotes in the case of the statements of the type described in Sections
8.01(a) and 8.01(b). Neither the Issuer nor any of its Subsidiaries has any material contingent liabilities or unusual
forward or long-term commitments required to be disclosed in the aforementioned financial statements and related
footnotes in accordance with GAAP that are not disclosed therein.
(b)
No Material Adverse Change. Since December 31, 2021, there has been no Material Adverse
Change.
7.05
Properties.
(a)
Property Generally. With respect to all real and personal assets and properties of the Issuer and
each of its Subsidiaries (other than Intellectual Property which is covered in clause (b) below), the Issuer and each
of its Subsidiaries has good and marketable fee simple title to, valid leasehold interests or other equivalent rights
in, all such real and personal assets and property, whether tangible or intangible, material to its respective business
and except as disclosed in a Certificate of Title, subject only to Permitted Liens and except for defects in title that
do not, and are not reasonably anticipated to materially interfere with the ability of the Issuer or any such
Subsidiaries, as the case may be, to utilize such assets and properties in the ordinary course of business as
currently conducted and anticipated to be conducted.
(b)
Intellectual Property.
(i)
Schedule 7.05(b) contains, with respect to the Obligors and their respective Material
Intellectual Property (set forth on an Obligor-by-Obligor basis and designated as to whether such Material
Intellectual Property is owned or in-licensed):
a complete and accurate list of all applied for, issued, or registered Patents owned by
or licensed to the Obligors, including the jurisdiction and patent number, which would qualify as Material
Intellectual Property;
(A)
a complete and accurate list of all material applied for, or registered active
Trademarks owned by or licensed to the Obligors, including the jurisdiction, trademark application or registration
number and the application or registration date, which would qualify as Material Intellectual Property; and
(B)
licensed to the Obligors, which would qualify as Material Intellectual Property.
(C)
a complete and accurate list of all applied for or registered Copyrights owned by or
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(ii) With respect to any such Intellectual Property listed on Schedule 7.05(b) that is designated
as being in-licensed by the Obligors from a third party, there are no unpaid fees or royalties (or similar payment
obligations) currently due and payable under or in respect of any such in-licensed Material Intellectual Property
(or any license or other Contract related thereto) and, to the knowledge of the Issuer, such license is legal, valid,
binding, enforceable, and in full force and effect. No Obligor is in material breach or default of any such license
and, to the knowledge of the Issuer, no third party (including the licensor of any such licensed Material
Intellectual Property) is in material breach or default of any such license that, in either case, could reasonably be
expected to give rise to a right of rescission, termination, revision or amendment of any of any such license.
(iii) With respect to any such Material Intellectual Property listed on Schedule 7.05(b) that is
designated as being owned by the Obligors, each Obligor, as the case may be, is the beneficial owner of all right,
title and interest in and to such Person’s Material Intellectual Property that it owns, with no breaks in chain of title
and with good and marketable title, free and clear of any Liens or Claims of any kind whatsoever (other than
Permitted Liens), and the Issuer or the applicable Obligor, as the case may be, has the right to use such Material
Intellectual Property in the ordinary course of its respective business as currently conducted and as anticipated to
be conducted. Without limiting the foregoing, and except as set forth on Schedule 7.05(b):
other than as permitted by Section 9.09, neither the Issuer nor any Subsidiary
Guarantor, has transferred ownership of any such Material Intellectual Property, in whole or in part, to any Person
who is not an Obligor;
(A)
(B)
other than (1) customary restrictions in in-bound licenses of Intellectual Property
and non-disclosure agreements, in each case as permitted pursuant to Section 9.19 or (2) licenses granted to the
Issuer’s or any of its Subsidiaries’ customers or development partners in the ordinary course of business, there are
no judgments, covenants not to sue, permits, grants, licenses, Liens (other than Permitted Liens), Claims, or other
agreements or arrangements relating to any such Material Intellectual Property, including any development,
submission, services, research, license or support agreements, which bind, obligate or otherwise restrict the Issuer
or any of its Subsidiaries with respect to any such Material Intellectual Property in any material respect;
(C)
the use by the Issuer or any of its Subsidiaries of any such Material Intellectual
Property in the ordinary course of such Person’s businesses does not breach, violate, infringe or interfere with or
constitute a misappropriation of any valid rights arising under any Intellectual Property of any other Person that,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect;
(D)
(1) there are no pending or, to the Issuer’s knowledge, threatened in writing Claims
against the Issuer or any of its Subsidiaries asserted by any other Person relating to any such Material Intellectual
Property, including any Claims of adverse ownership, invalidity, infringement, misappropriation, violation or
other opposition to or conflict with such Material Intellectual Property; and (2) neither the Issuer nor any of its
Subsidiaries has received any written notice from, or Claim by, any other Person that the business of the Issuer or
any of its Subsidiaries, the use of any such Material Intellectual Property by the Issuer or any of its Subsidiaries
materially
62
infringes upon, violates or constitutes a misappropriation of, or may infringe upon, violate or constitute a
misappropriation of, or otherwise interfere with, or otherwise offer a license with respect to any Intellectual
Property of any such other Person; and
(E)
to the Issuer’s knowledge, no such Material Intellectual Property is being infringed,
violated, misappropriated or otherwise used by any other Person without the express authorization of the Issuer;
and, without limiting the foregoing, neither the Issuer nor any of its Subsidiaries has put any other Person on
notice of actual or potential infringement, violation or misappropriation of any such Material Intellectual Property,
and neither the Issuer nor any of its Subsidiaries has initiated the enforcement of any Claim with respect to any
such Material Intellectual Property.
(iv) With respect to the owned Material Intellectual Property of the Obligors consisting of
Patents listed on Schedule 7.05(b), except as set forth on Schedule 7.05(b), and without limiting the
representations and warranties in Section 7.05(b)(iii):
(A)
each of the issued claims in such Patents is valid and enforceable;
(B)
each inventor named in such Patents has executed written Contracts with the Issuer
or one of its Subsidiaries (or a predecessor-in-interest) that properly and irrevocably assigns to the Issuer or such
Subsidiary (or such predecessor-in-interest) all of such inventor’s rights, title and interest to any of the Inventions
claimed in such Patents;
claimed in any such Patent, have been dedicated to the public;
(C)
all such Patents are in good standing and none of the Patents, or the Inventions
all prior art material to such Patents was adequately disclosed, to the extent such
disclosure is required, to the relevant patent office or, to the Issuer’s knowledge, considered by the respective
patent offices during prosecution of such Patents;
(D)
subsequent to the issuance of such Patents, none of the Issuer, any of its Subsidiaries
or any of their respective predecessors-in-interest, has filed any disclaimer or made or permitted any other
voluntary reduction in the scope of the Inventions claimed in such Patents;
(E)
(F)
no subject matter designated allowable or allowed by the U.S. Patent and Trademark
Office of such Patents is subject to any competing conception claims of allowable or allowed subject matter of
any patent applications or patents of any third party and have not been the subject of any interference, and such
Patents are not and have not been the subject of any re-examination, opposition or any other post-grant
proceedings, and neither the Issuer nor any of its Subsidiaries has knowledge of any basis for any such
interference, re-examination, opposition, inter partes review, post grant review, or any other post-grant
proceedings;
(G)
no such Patents have ever been finally adjudicated to be invalid, unpatentable or
unenforceable for any reason in any administrative, arbitration, judicial or other proceeding, and, with the
exception of publicly available documents in the applicable patent office recorded with respect to any Patents,
neither the Issuer nor any of its Subsidiaries has received any written, or to its knowledge, other notice asserting
that such Patents are invalid, unpatentable or
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unenforceable; if any of such Patents is terminally disclaimed to another patent or patent application, all patents
and patent applications subject to such terminal disclaimer are included in the Collateral;
neither the Issuer nor any of its Subsidiaries has received an opinion, whether
preliminary in nature or qualified in any manner, which concludes that a challenge to the validity or enforceability
of any such Patents is more likely than not to succeed;
(H)
(I)
(i) neither the Issuer nor any of its Subsidiaries, nor, any of their respective agents or
representatives, have engaged in any conduct, or omitted to perform any necessary act, the result of which would
invalidate or render unpatentable or unenforceable any such Patent and (ii) to the Issuer’s knowledge, no prior
owner of any such Patent of the Issuer or any of its Subsidiaries, nor any of such prior owner’s agents or
representatives, have engaged in any conduct, or omitted to perform any necessary act, the result of which would
invalidate or render unpatentable or unenforceable any such Patent; and
all maintenance fees, annuities, and the like due or payable on or with respect to any
such Patents have been timely paid or the failure to so pay could not, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Change.
(J)
(v)
The Material Intellectual Property listed on Schedule 7.05(b), together with the Issuer’s
and its Subsidiaries’ lawful use of open source, freeware, is all the Intellectual Property necessary for the
operation of the business of the Issuer and its Subsidiaries as it is currently conducted or as currently contemplated
to be conducted. Issuer and each of its Subsidiaries have taken commercially reasonable precautions to protect the
secrecy, confidentiality and value of its Material Intellectual Property consisting of trade secrets and confidential
information, including unregistered Intellectual Property that is material to their respective businesses.
7.06 No Actions or Proceedings.
(a)
Litigation. Except as set forth on Schedule 7.06(a), there is no litigation, investigation or
proceeding pending or, to the knowledge of the Issuer, threatened in writing, with respect to the Issuer or any of its
Subsidiaries by or before any Governmental Authority or arbitrator that (i) could, individually or in the aggregate,
reasonably be expected to result in an Event of Default or (ii) involves this Agreement, any other Notes
Document, the Transactions or any Material Intellectual Property.
(b)
Environmental Matters. The operations and property of the Issuer and each of its Subsidiaries
comply with all applicable Environmental Laws, except to the extent the failure to so comply (either individually
or in the aggregate) could not reasonably be expected to result in Material Adverse Effect.
(c)
Labor Matters. There are no strikes, lockouts or other material labor disputes against the Issuer or
any of its Subsidiaries or, to the Issuer’s knowledge, threatened in writing against or directly affecting the Issuer
or any of its Subsidiaries, and no material unfair labor practice complaint is pending against the Issuer or any
Subsidiary or, to the knowledge of the Issuer, threatened in writing against any of them before any Governmental
Authority, in each case, that could reasonably be expected to result in a Material Adverse Effect. Except as set
forth on
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Schedule 7.06(c), neither the Issuer nor any of its Subsidiaries is a party to any collective bargaining agreements
or similar Contracts, no union representation exists on any facilities of the Issuer or any of its Subsidiaries and the
Issuer and its Subsidiaries do not have any knowledge of any union organizing activities that are taking place.
7.07 Compliance with Laws and Agreements.
(a)
Each of the Issuer and its Subsidiaries is in compliance with all applicable Laws and all Contracts
binding upon it or its property, except (other than with respect to Material Intellectual Property) where the failure
to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
No Default has occurred and is continuing, or will occur as a result of the issuing of any Notes hereunder.
(b) Without limiting the generality of the foregoing, (i) each of the Issuer and its Subsidiaries is in
material compliance with all applicable Healthcare Laws and Healthcare Permits, and (ii) during the past four (4)
years neither the Issuer nor any of its Subsidiaries has received written notice by a Governmental Authority of any
material violation (or of any investigation, audit, or other proceeding involving allegations of any violation) of any
Healthcare Laws, and no such investigation, inspection, audit or other proceeding involving allegations of any
such violation has been, to the knowledge of the Issuer, threatened in writing.
7.08 Taxes. Except as set forth on Schedule 7.08, the Issuer and each of its Subsidiaries has timely filed or
caused to be filed all federal and state income tax returns and other material tax returns and reports required to
have been filed and has paid or caused to be paid all material Taxes required to have been paid by it, except for
Taxes that are being contested in good faith by appropriate proceedings and for which, in each case, the Issuer or
such Subsidiary, as applicable, has set aside on its books adequate reserves with respect thereto in accordance with
GAAP.
7.09
Full Disclosure. None of the reports, financial statements, certificates (other than the Certificates of Title)
or other information furnished by or on behalf of the Obligors to the Administrative Agent or any Noteholder in
connection with the negotiation of this Agreement and the other Notes Documents or delivered hereunder or
thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of
material fact or omits to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with respect to projected financial
information, the Issuer represents only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time (it being understood by the Administrative Agent and the Noteholders that
such projected financial information is not to be viewed as facts, and that no assurances can be given that any
particular projections will be realized and that actual results during the period or periods covered by any such
projections may differ from the projected results and such differences may be material). In respect of the
Certificates of Title, the information supplied by or on behalf of the Obligors to the lawyers who prepared any
Certificate of Title for the purpose of that Certificate of Title was true, complete and accurate as at the date of the
Certificate of Title or (if appropriate) as at the date (if any) at which it is stated to be given and did not omit any
information which, if disclosed, would make that information untrue or misleading in any material respect.
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7.10
Investment Company Act and Margin Stock Regulation.
(a)
Investment Company Act. Neither the Issuer nor any of its Subsidiaries is an “investment
company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.
(b) Margin Stock. Neither the Issuer nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate,
of buying or carrying Margin Stock, and no part of the proceeds of the Notes will be used to buy or carry any
Margin Stock in violation of Regulation T, Regulation U or Regulation X.
Solvency. The Issuer and its Subsidiaries, on a consolidated basis, are, and, immediately after issuing the
7.11
Notes and the use of proceeds thereof, will be Solvent.
7.12 Equity Holders, Subsidiaries and Other Investments.
(a)
Set forth on Schedule 7.12(a) is a complete and correct list of all direct and indirect Subsidiaries of
the Issuer. Each such Subsidiary is duly organized or incorporated, as applicable and validly existing under the
jurisdiction of its organization or incorporation, as applicable shown in Schedule 7.12(a), and the percentage
ownership by the Issuer of each such Subsidiary thereof is as shown in Schedule 7.12(a).
(b)
Set forth on Schedule 7.12(b) is a complete and correct list of all other Equity Interests owned or
held by the Issuer or any of its direct or indirect Subsidiaries in any Person that does not qualify as a direct or
indirect Subsidiary of the Issuer. Schedule 7.12(b) also sets forth, in reasonable detail, the type of Equity Interest
held by each Obligor in such other Person and the fully-diluted percentage ownership held beneficially by the
Issuer or one or more of its Subsidiaries, as the case may be, such other Person.
7.13 Continuing Secured Indebtedness. Set forth on Schedule 7.13 is a complete and correct list of all
Indebtedness of the Issuer and each of its Subsidiaries outstanding as of the date hereof that (i) will remain
outstanding immediately after the issuing of the Notes and the application of proceeds therefrom on the Closing
Date and (ii) is secured by a Lien on assets or property of the Issuer or any of its Subsidiaries.
7.14 Material Agreements. Except as set forth on Schedule 7.14, as of the Closing Date, all Material
Agreements have been publically disclosed. Neither the Issuer nor any of its Subsidiaries is in default under any
such Material Agreement, and the Issuer does not have knowledge of any material default by any counterparty to
any such Material Agreement and there are no pending or, to the Issuer’s knowledge, threatened material adverse
Claims against the Issuer or any of its Subsidiaries asserted by any other Person relating to any such Material
Agreements, including any such Claims of breach or default thereunder.
7.15 Restrictive Agreements. Except as set forth on Schedule 7.15, neither the Issuer nor any of its
Subsidiaries is subject to any Restrictive Agreement, except those permitted under Section 9.11.
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7.16 Real Property. Except as set forth on Schedule 7.16, neither the Issuer nor any of its Subsidiaries owns or
leases (as a tenant) any real property.
7.17
Pension Matters. Except as, in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, (a) each Benefit Plan, and each trust thereunder, intended to qualify for tax-exempt status under
Section 401 or 501 of the Code or other applicable Law so qualifies, (b) each Benefit Plan and Foreign Pension
Plan is in compliance with all applicable provisions of ERISA, the Code or other applicable Law, (c) no ERISA
Event has occurred or is reasonably expected to occur, (d) the Issuer and each of its ERISA Affiliates has met all
applicable requirements under the ERISA Funding Rules with respect to each Title IV Plan, and no waiver of the
minimum funding standards under the ERISA Funding Rules has been applied for or obtained, (e) as of the most
recent valuation date for any Title IV Plan, the funding target attainment percentage (as defined in Section 430(d)
(2) of the Code) is at least sixty percent (60%), and none of the Issuer, any of its Subsidiaries nor any of their
ERISA Affiliates knows of any facts or circumstances that could reasonably be expected to cause the funding
target attainment percentage to fall below sixty percent (60%) as of the most recent valuation date and (f) neither
the Issuer nor any of its ERISA Affiliates has or would have any Withdrawal Liability as a result of a complete
withdrawal from any Multiemployer Plan on the date this representation is made.
7.18
Priority of Obligations; Collateral; Security Interest. No monetary Obligation arising hereunder or
under any Notes Document, or arising in connection herewith or therewith, is contractually subordinated to any
other Indebtedness of the Obligors. Subject to the Legal Reservations and Perfection Requirements solely in
respect of the English Guarantor and the Irish Subsidiary Guarantor, each Security Document is effective to create
in favor of the Secured Parties a legal, valid and enforceable security interest in the Collateral subject to such
Security Document, each such security interest is legal, valid and enforceable, and each such security interest is
perfected to the extent required by the applicable Security Document on a first-priority basis (subject to Permitted
Liens that may apply to specific items of Collateral permitted pursuant to Section 9.02) and secures the
Obligations.
7.19 Governmental Approvals in Respect of Ordinary Course Activities, Etc. The Issuer and each of its
Subsidiaries hold, and will continue to hold, either directly or through licensees or agents, all Governmental
Approvals, including all Healthcare Permits, necessary or required for the Issuer and each of its Subsidiaries to
engage in and otherwise conduct their respective operations and businesses in the ordinary course, including their
commercialization and development of products.
7.20 Transactions with Affiliates. Except as set forth on Schedule 7.20, neither the Issuer nor any of its
Subsidiaries is a party to any transaction with any Affiliate that would be prohibited pursuant to Section 9.10
hereof.
7.21
Sanctions. Neither the Issuer nor any of its Subsidiaries, any of their respective directors, officers, or
employees nor, to the knowledge of the Issuer, agents or other Persons acting on behalf of any of the foregoing (i)
is currently the target of any Sanctions, (ii) is operating, organized or resident in any Designated Jurisdiction, (iii)
is engaged in any transactions with, or for the benefit of, any Person who is the target of Sanctions or who is
operating, organized or resident in any Designated Jurisdiction in violation of Sanctions or (iv) is in violation of
Sanctions. No Notes,
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nor the proceeds from any Notes, will be used, directly or indirectly, to lend, contribute or provide to, or has been
or will be otherwise made available to fund, any activity or business in any Designated Jurisdiction or any activity
or business of any Person located, organized or residing in any Designated Jurisdiction, in violation of Sanctions
or who is the subject of any Sanctions, or in any other manner that will result in any violation by any Person
(including the Administrative Agent, the Noteholders and their Affiliates) of Sanctions.
7.22 Anti-Corruption. Neither the Issuer nor any of its Subsidiaries, any of their respective directors, officers
or employees nor, to the knowledge of the Issuer, any agents or other Persons acting on behalf of any of the
foregoing, directly or indirectly, has (i) violated or is in violation of any applicable anti-corruption Law or (ii)
made, offered to make, promised to make or authorized the payment or giving of, directly or indirectly, any
Prohibited Payment.
7.23 Deposit and Disbursement Accounts and Investment Accounts. Schedule 7.23 contains a list of all
banks and other financial institutions at which the Obligors maintain deposit accounts, lockboxes, disbursement
accounts, investment accounts or other similar accounts, and such Schedule correctly identifies the name and
address of each bank or financial institution, the name in which the account is held, the type of account, and the
complete account number therefor.
7.24 Centre of Main Interests. For the purposes of Regulation (EU) 2015/848 of 20 May 2015 on insolvency
proceedings (recast) (the Regulation), the Issuer’s centre of main interest (as that term is used in Article 3(1) of
the Regulation) is situated in its jurisdiction of organization and it has no "establishment" (as that term is used in
Article 2(10) of the Regulations) in any other jurisdiction.
SECTION 8
AFFIRMATIVE COVENANTS
The Obligors jointly and severally covenant and agree with the Administrative Agent and the Noteholders
that, until the Commitments have expired or been terminated and all Obligations (other than inchoate
indemnification and expense reimbursement obligations for which no Claim has been made) have been paid in full
in cash:
Financial Statements and Other Information. The Issuer shall furnish to the Administrative Agent (with
8.01
sufficient copies for each Noteholder):
(a)
As soon as available and in any event within (i) forty five (45) days after the end of each of the first
three fiscal quarters of each fiscal year and (ii) ninety (90) days after the end of the last fiscal quarter of each fiscal
year, (i) a consolidated balance sheet of the Issuer and its Subsidiaries as of the end of such fiscal quarter, and (ii)
the related consolidated statements of income, shareholders’ equity and cash flows of the Issuer and its
Subsidiaries for such quarter and the portion of the fiscal year through the end of such fiscal quarter, in each case,
prepared in accordance with GAAP consistently applied, all in reasonable detail and setting forth in comparative
form the figures for the corresponding period in the preceding fiscal year, together with (iii) a certificate of a
Responsible Officer of the Issuer stating that (x) such financial statements fairly present in all material respects the
financial condition of the Issuer and its Subsidiaries as at such date and (y) the results of operations of the Issuer
and its Subsidiaries for
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the period ended on such date have been prepared in accordance with GAAP consistently applied, subject to
changes resulting from normal, year-end audit adjustments and except for the absence of notes; provided that
documents required to be furnished pursuant to this Section 8.01(a) shall be deemed furnished on the date that
such documents are publicly available on “EDGAR” (with the related certificate separately delivered).
(b)
As soon as available and in any event within ninety (90) days after the end of each fiscal year, (i)
the consolidated balance sheets of the Issuer and its Subsidiaries as of the end of such fiscal year, and (ii) the
related consolidated statements of income, shareholders’ equity and cash flows of the Issuer and its Subsidiaries
for such fiscal year, in each case prepared in accordance with GAAP consistently applied, all in reasonable detail
and setting forth in comparative form the figures for the previous fiscal year, accompanied by a report and opinion
thereon of independent certified public accountants of recognized national standing reasonably acceptable to the
Administrative Agent, which report and opinion shall be prepared in accordance with Public Company
Accounting Oversight Board standards and shall not be subject to (x) with respect to any such reports or opinions
prepared for any fiscal year ending after December 31, 2022, any “ going concern” or similar qualification or
exception (other than any such qualification or exception in respect of the Issuer’s failure to have access to
sufficient cash to pay the Obligations in full on the Maturity Date) or (y) any qualification or exception as to the
scope of such audit, and in the case of such consolidating financial statements, certified by a Responsible Officer
of the Issuer; provided that documents required to be furnished pursuant to this Section 8.01(b) shall be deemed
furnished on the date that such documents are publicly available on “EDGAR”.
(c)
Together with the financial statements required pursuant to Sections 8.01(a) and 8.01(b), (i) a
management discussion and analysis (“MD&A”), prepared in writing and in reasonable detail in a manner
consistent with the requirements of Item 303 of Regulation S–K of the Securities Act, discussing the Issuer’s
financial condition and results of operations as set forth in such financial statements; provided that for so long as
Issuer remains (A) a “smaller reporting company” as defined in the Securities Act and Exchange Act and/or (B)
an emerging growth company (as defined in the Jumpstart Our Business Startups Act of 2012) through the end of
an applicable reporting period, any reduced disclosure obligations under SEC rules relating to the MD&A
applicable to smaller reporting companies and/or emerging growth companies shall apply and (ii) a compliance
certificate of a Responsible Officer, substantially in the form of Exhibit E (a “Compliance Certificate”), as of the
end of the applicable accounting period, including, with respect to the financial statement delivered pursuant to
Section 8.01(b), details of any issues that are material that are raised by the Issuer’s auditors. In addition,
promptly following the Administrative Agent’s reasonable request, reasonable proof of the Issuer’s compliance
with Section 10.01.
(d)
[Reserved].
(e)
Promptly after the same are released, copies of all press releases; provided that documents required
to be furnished pursuant to this Section 8.01(e) shall be deemed furnished on the date that such documents are
publicly available on “EDGAR” or on the Issuer’s website.
(f)
Promptly, and in any event within five (5) Business Days after receipt, by an Obligor thereof,
copies of each material notice or other material correspondence received from any
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securities regulator or exchange to the authority of which the Issuer or any Obligor may become subject from time
to time concerning any investigation or possible investigation or other inquiry by such agency regarding financial
or other operational results of the Issuer or any Obligor; provided that documents required to be furnished
pursuant to this Section 8.01(f) shall be deemed furnished on the date that such documents are publicly available
on “EDGAR”.
(g)
Promptly (and in any event within five (5) Business Days of delivery) after the same are available,
copies of each annual report, proxy or financial statement and any other statements, reports, communications and
notices (including board kits) made available to the Issuer’s Board or holders of the Equity Interests of the Issuer
or any of its Subsidiaries (including copies of all annual, regular, periodic and special reports and registration
statements which the Issuer or any its Subsidiaries may file or be required to file with any securities regulator or
exchange to the authority of which the Issuer or such Subsidiary, as applicable, may become subject from time to
time); provided that documents required to be furnished pursuant to this Section 8.01(g) shall be deemed
furnished on the date that such documents are publicly available on “EDGAR”. Notwithstanding the foregoing,
any materials delivered to a member of the Board of Issuer that is a representative of Administrative Agent or its
Affiliates shall satisfy the requirements of this clause (g) so long as such member is permitted to provide such
materials to the Administrative Agent.
(h)
Promptly following Administrative Agent’s reasonable request, the information regarding
insurance maintained by the Issuer and its Subsidiaries as required under Section 8.05.
(i)
Within thirty (30) days following the end of each calendar month, evidence satisfactory to the
Administrative Agent, based upon the Issuer’s bank account statements, that the Issuer has met its minimum
liquidity requirement set forth in Section 10.01.
(j)
Such other information respecting the operations, properties, business, liabilities or condition
(financial or otherwise) of the Obligors (including with respect to the Collateral) as the Administrative Agent may
from time to time reasonably request.
The Issuer hereby acknowledges that the Administrative Agent or the Noteholders may not wish to receive
material non-public information with respect to the Issuer or its Affiliates, or the respective securities of any of the
foregoing, and the Administrative Agent, the Noteholders or their respective personnel may be engaged in
investment and other market-related activities with respect to such Persons’ securities. In order to avoid disclosing
material non-public information, the parties hereto covenant and agree that Issuer will not become obligated to
provide the Administrative Agent, any Noteholder or their respective representatives or agents with any
information pursuant to this Section 8.01 other than information that is required to be publicly disclosed by the
SEC and is publicly available on “EDGAR”, unless (x) the Administrative Agent or its Affiliates have a
representative on the Board of the Issuer or (y) prior thereto, the Administrative Agent or a Noteholder, as the case
may be, shall have notified the Issuer in writing that it consents to receive such information.
8.02 Notices of Material Events. On or within five (5) Business Days (or such longer or shorter period as may
be expressly set forth below) after a Responsible Officer of the Issuer first learns of
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or acquires knowledge with respect to any of the below events or circumstances, the Issuer shall furnish to the
Administrative Agent written notice thereof (prepared in reasonable detail):
(a)
(b)
The occurrence of any Default.
The occurrence of any event with respect to any property or assets of the Issuer or any of its
Subsidiaries resulting in a Loss aggregating $2,500,000 (or the Equivalent Amount in other currencies) or more.
(c)
Any written or filed Claim, action, suit, notice of violation, hearing, investigation or other
proceedings pending, or to the best of the Issuer’s knowledge, threatened against or affecting the Issuer or any of
its Subsidiaries or with respect to the ownership, use, maintenance and operation of their respective businesses,
operations or properties, whether made by a Governmental Authority or other Person that, if adversely determined
could reasonably be expected to result in a Loss of $2,500,000 or more.
(d)
(i) On or prior to the date of any filing by Issuer or any of its ERISA Affiliates of any notice of
intent to terminate any Title IV Plan that could reasonably be expected to result in a Material Adverse Effect, a
copy of such notice and (ii) promptly, and in any event within ten (10) days, after any Responsible Officer of the
Issuer knows (A) that an ERISA Event that could reasonably be expected to result in a Material Adverse Effect
has occurred or is reasonably expected to occur or (B) that a request for a minimum funding waiver under Section
412 of the Code has been filed with respect to any Title IV Plan or Multiemployer Plan and could reasonably be
expected to result in a Material Adverse Effect, a notice (which may be made by telephone if promptly confirmed
in writing) describing such waiver request and any action that any ERISA Affiliate proposes to take with respect
to either of the foregoing, together with a copy of any notice filed with the PBGC or the IRS pertaining thereto.
(e)
Concurrently with the delivery of the Compliance Certificate pursuant to Section 8.01(c), the
receipt by the Issuer or any of its Subsidiaries of any notice of a material breach, subject to any applicable cure
period, under or in respect of any Material Agreement.
(f)
The reports and notices as required by the Security Documents.
(g) Within thirty (30) days of the date thereof, or, if earlier, on the date of delivery of any financial
statements pursuant to Section 8.01 with respect to the first fiscal period to which such change is applicable,
notice of any material change in accounting policies or financial reporting practices by the Obligors; provided that
disclosure in the notes to such financial statements, if any, shall be deemed to satisfy the requirements of this
Section 8.02(g).
(h)
Notice of any labor controversy resulting in or threatening to result in any strike, permanent work
stoppage, boycott, shutdown or other material labor disruption against or involving the Issuer or any of its
Subsidiaries.
(i)
Notice of infringement or alleged infringement of any Material Intellectual Property of another
Person by Issuer or any of its Subsidiaries that, if adversely determined could reasonably be expected to result in a
Loss of $2,500,000 or more.
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(j)
Within seven (7) Business Days, any change to Obligors’ ownership of Deposit Accounts,
Securities Accounts and Commodity Accounts, by delivering to the Administrative Agent, a notice setting forth a
complete and correct list of all such accounts as of the date of such change.
Each notice delivered under this Section 8.02 shall be accompanied by a statement of a Responsible
Officer of the Issuer setting forth the details of the event or development requiring such notice and any action
taken or proposed to be taken with respect thereto. Information required to be delivered pursuant to this Section
8.02 shall be deemed to have been delivered on the date that such information shall have been made publicly
available on “EDGAR” so long as such information has been made publicly available within the five (5) Business
Day period set forth above. Nothing in this Section 8.02 is intended to waive, consent to or otherwise permit any
action or omission that is otherwise prohibited by this Agreement or any other Notes Document.
The Issuer hereby acknowledges that the Administrative Agent or the Noteholders may not wish to receive
material non-public information with respect to the Issuer or its Affiliates, or the respective securities of any of the
foregoing, and the Administrative Agent, the Noteholders or their respective personnel may be engaged in
investment and other market-related activities with respect to such Persons’ securities. In order to avoid disclosing
material non-public information, the parties hereto covenant and agree that, as except for any notice required
pursuant to clause (a) above, Issuer will not become obligated to provide the Administrative Agent, any
Noteholder or their respective representatives or agents with any information pursuant to this Section 8.02 other
than information that is required to be publicly disclosed by the SEC and is publicly available on “EDGAR”,
unless (x) the Administrative Agent or its Affiliates have a representative on the Board of the Issuer or (y) prior
thereto, the Administrative Agent or a Noteholder, as the case may be, shall have notified the Issuer in writing that
it consents to receive such information.
8.03 Existence; Conduct of Business. The Issuer shall, and shall cause each of its Subsidiaries to, do or cause
to be done all things necessary to preserve, renew and maintain in full force and effect its legal existence and all
Governmental Approvals material to the conduct of its business; provided that the foregoing shall not prohibit any
merger, amalgamation, consolidation, liquidation or dissolution permitted under Section 9.03.
8.04
Payment of Obligations. The Issuer shall, and shall cause each of its Subsidiaries to, pay and discharge its
material obligations, including (i) all material Taxes, fees, assessments and governmental charges or levies
imposed upon it or upon its properties or assets prior to the date on which penalties attach thereto, and all lawful
Claims for labor, materials and supplies which, if unpaid, might become a Lien upon any properties or assets of
the Issuer or any of its Subsidiaries, except to the extent such Taxes, fees, assessments or governmental charges or
levies, or such claims are being contested in good faith by appropriate proceedings and are adequately reserved
against in accordance with GAAP, and (ii) all other lawful Claims which, if unpaid, would by Law become a Lien
upon any properties or assets of the Issuer or any of its Subsidiaries, other than any Permitted Lien.
8.05
Insurance. The Issuer shall, and shall cause each of its Subsidiaries to maintain, with financially sound
and reputable insurance companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses
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operating in the same or similar locations, and with coverage amounts of at least $2,000,000 in general liability
insurance with a $5,000,000 umbrella. Upon the request of the Administrative Agent, the Issuer shall furnish to
the Administrative Agent from time to time: (i) full information as to the insurance carried by the Issuer and each
of its Subsidiaries and, if so requested, copies of all such insurance policies and (ii) a certificate from the Issuer’s
insurance broker or other insurance specialist stating that all premiums then due on the policies relating to
insurance in respect of the Collateral have been paid and that such policies are in full force and effect. The Issuer
shall use commercially reasonable efforts to ensure, or cause others to ensure, that all insurance policies in respect
of the Collateral shall provide that they shall not be terminated or cancelled without at least thirty (30) days’ (ten
(10) days for nonpayment of premium) prior written notice to the Issuer and the Administrative Agent. Receipt of
notice of cancellation or modification of any such insurance policies or reduction of coverage or amounts
thereunder shall entitle any Secured Party to renew any such policies, cause the coverage and amounts thereof to
be maintained at levels required pursuant to the first sentence of this Section 8.05 or otherwise to obtain similar
insurance in place of such policies, in each case at the expense of the Issuer (payable on demand).
8.06 Books and Records; Inspection Rights. The Issuer shall, and shall cause each of its Subsidiaries to, keep
proper books of record and account in which full, true and correct entries are made of all dealings and transactions
in relation to its business and activities. The Issuer shall, and shall cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Noteholder, upon reasonable prior written notice
and during normal business hours, to visit and reasonably inspect its properties, to reasonably examine and make
extracts from its books and records (excluding records subject to attorney-client privilege, subject to binding
confidentiality agreements with third parties that preclude disclosure to any Secured Party (acting in such
capacity) not entered into in contemplation of this Section 8.06 or subject to confidentiality restrictions pursuant
to applicable Law (including HIPAA)), and to discuss its affairs, finances and condition (financial or otherwise)
with its officers and, if necessary after such discussions with such Obligor’s officers, its independent accountants,
all at such reasonable times (but not more often than once per year unless an Event of Default has occurred and is
continuing) as the Administrative Agent or the Noteholders may reasonably request; provided that no notice shall
be required if an Event of Default has occurred and is continuing. The Issuer shall pay all reasonable and
documented costs and expenses of all such inspections.
8.07 Compliance with Laws and Material Agreements. The Issuer shall, and shall cause each of its
Subsidiaries to, (i) comply in all material respects with all applicable Laws and Governmental Approvals
(including Environmental Laws and all Healthcare Laws and Healthcare Permits), and (ii) use commercially
reasonable efforts to remain in compliance with, and perform all obligations under or in connection with, all
Healthcare Permits and Material Agreements in accordance with the terms and conditions set forth in Section
9.12(b).
8.08 Maintenance of Properties, Etc. The Issuer shall, and shall cause each of its Subsidiaries to, maintain and
preserve all of its assets and properties, whether tangible or intangible, necessary or useful in the proper conduct
of its business in good working order and condition in accordance with the general practice of other Persons of
similar character and size or, in accordance with the terms of any lease of a Manufacturing Facility under which
the Issuer or its Subsidiaries holds an interest, ordinary wear and tear and damage from casualty or condemnation
excepted.
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8.09 Governmental Approvals, Etc. The Issuer shall, and shall cause each of its Subsidiaries to, obtain and
maintain all Governmental Approvals (including all Healthcare Permits) necessary in connection with (i) the
execution, delivery and performance of the Notes Documents, (ii) the consummation of the Transactions and (iii)
the operation and conduct of their respective businesses and the ownership of their respective properties, except,
in the case of clause (iii) above, where the failure to do so could not reasonably be expected to have a Material
Adverse Effect on the Issuer’s and its Subsidiaries’ business.
8.10 Action under Environmental Laws. The Issuer shall, and shall cause each of its Subsidiaries to, upon
becoming aware of the release of any Hazardous Materials or the existence of any environmental liability under
applicable Environmental Laws with respect to their respective businesses, operations or properties, take all
commercially reasonable actions, at their cost and expense, as shall be necessary or advisable to investigate and
clean up the condition of their respective businesses, operations or properties, including all required removal,
containment and remedial actions, to restore their respective businesses, operations and properties to a condition
in each case, in material compliance with applicable Environmental Laws.
8.11 Use of Proceeds. The proceeds of the Commitments or any amounts extended for the subscription for
Tranche 2 Notes shall be used only as provided in Section 2.04. Without limiting the foregoing, no part of the
proceeds of the Commitments or any amounts extended for the subscription for Tranche 2 Notes shall be used,
whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board of
Governors of the Federal Reserve System, including Regulation T, Regulation U and Regulation X.
8.12 Certain Obligations Respecting Subsidiaries; Further Assurances.
(a)
Subsidiary Guarantors. The Issuer shall take such action from time to time as shall be necessary
to ensure that (x) each of its Subsidiaries that is a party to this Agreement as of the Closing Date will be and will
remain an Obligor and Subsidiary Guarantor hereunder (except as otherwise permitted by Section 9.03), and (y)
each direct or indirect Subsidiary of the Subsidiary Guarantors (other than any Immaterial Subsidiary), whether
direct or indirect, now existing or hereafter created, will, within thirty (30) days of becoming a Subsidiary of a
Subsidiary Guarantor, become a “Subsidiary Guarantor” pursuant to this Section 8.12. Without limiting the
generality of the foregoing, in the event that any Subsidiary Guarantor shall form or acquire any new Subsidiary
(other than any Immaterial Subsidiary), the Issuer shall, within thirty (30) days (or such longer period as the
Administrative Agent, in its reasonable discretion, may consent to) of such formation or acquisition, cause such
Subsidiary (other than any Immaterial Subsidiary) to become a “Subsidiary Guarantor” hereunder, a “Grantor” (or
the equivalent thereof) under any applicable Security Document, and a “Subsidiary Party” under the Intercompany
Subordination Agreement;
(b)
The Issuer shall, except with respect to any Immaterial Subsidiary, take such action or cause such
new Subsidiary to take such action (including joining the applicable Security Document and delivering any
certificated Equity Interests together with undated transfer powers executed in blank, applicable control
agreements and other instruments) as shall be reasonably necessary or reasonably requested by the Administrative
Agent to create and perfect, in favor of the Administrative Agent, for the benefit of the Secured Parties, valid and
enforceable first priority
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Liens (other than Permitted Liens) on all Deposit Accounts, Securities Accounts and Commodity Accounts of
such new Subsidiary as collateral security for the Obligations hereunder; provided that any such security interest
or Lien shall be subject to the applicable Security Documents;
(i)
to the extent that the parent of such new Subsidiary (other than any Immaterial Subsidiary)
has not pledged Equity Interests in its Subsidiaries in accordance with the terms of the relevant Security
Document and this Agreement, cause the parent of such Subsidiary to execute and deliver a pledge agreement in
favor of the Administrative Agent, for the benefit of the Secured Parties, in respect of all outstanding issued
Equity Interests of such new Subsidiary; and
(ii)
deliver such proof of corporate action, incumbency of officers, opinions of counsel and
other documents as is consistent with those delivered by the Issuer pursuant to Section 6.01 or as the
Administrative Agent shall have reasonably requested.
(c)
Further Assurances.
(i)
The Issuer shall, and shall cause each of its direct or indirect Subsidiaries (including any
newly formed or newly acquired Subsidiaries (other than any Immaterial Subsidiary)) to take such action from
time to time as shall reasonably be requested by the Administrative Agent to effectuate the purposes and
objectives of this Agreement and the applicable Security Documents.
(ii) Without limiting the generality of the foregoing, within thirty (30) days following written
request from the Administrative Agent, the Issuer shall cause each Person that is required to be a Subsidiary
Guarantor or an Obligor hereunder to take such action from time to time (including executing and delivering such
Security Documents and delivering its certificated Equity Interests together with undated transfer powers executed
in blank) as shall be reasonably requested by the Administrative Agent to create, in favor of the Secured Parties,
perfected security interests and Liens on the Manufacturing Facilities and all Deposit Accounts, Securities
Accounts and Commodity Accounts of such Person and all Equity Interests in each Subsidiary Guarantor as
collateral security for the Obligations; provided that any such security interest or Lien shall be subject to
Permitted Liens and the relevant requirements of the applicable Security Documents.
8.13 Termination of Non-Permitted Liens. In the event that the Issuer or any of its Subsidiaries shall obtain
knowledge of, or be notified by the Administrative Agent or any Noteholder of the existence of, any outstanding
Lien against any assets or property of the Issuer or any of its Subsidiaries, which Lien is not a Permitted Lien, the
Issuer shall use commercially reasonable efforts to promptly terminate or cause the termination of such Lien.
8.14 Maintenance of the Governmental Approvals and Intellectual Property. The Issuer shall cause each of
its Subsidiaries (to the extent applicable) to, (i) maintain in full force and effect all material Governmental
Approvals, Healthcare Permits, Material Intellectual Property and other rights, interest or assets (whether tangible
or intangible) reasonably necessary for its ordinary course of business and commercial efforts as currently
conducted and as anticipated to be conducted, in each case, except where the failure to do so could not reasonably
be expected to result in a Material Adverse Effect, (ii) promptly upon obtaining knowledge thereof, notify the
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Administrative Agent of any infringement or other violation by any Person of the Issuer’s or Subsidiary
Guarantors’ Material Intellectual Property, and take commercially reasonable efforts to pursue any such
infringement or other violation, except in any specific circumstance where the Issuer reasonably determines in
good faith that it is not commercially reasonable to do so, (iii) use commercially reasonable efforts to pursue and
maintain in full force and effect all new Material Intellectual Property created, developed, or acquired by the
Issuer or any of its Subsidiaries, as the case may be, that are necessary for ordinary course commercial or business
activities or operations of such Person, and (iv) promptly after obtaining knowledge thereof, notify the
Administrative Agent of any written Claim by any Person that the conduct of the business of the Issuer or any of
its Subsidiaries has infringed upon any Intellectual Property of such Person that could reasonably be expected to
result in a Material Adverse Effect.
8.15 ERISA and Foreign Pension Plan Compliance. Except as could not reasonably be expected to result in a
Material Adverse Effect, the Issuer shall comply, and shall cause each of its Subsidiaries to comply, with the
provisions of ERISA or applicable Law with respect to any Plans or Foreign Pension Plans to which the Issuer or
any such Subsidiary is a party as an employer.
8.16 Cash Management. The Issuer shall, and shall cause the Subsidiary Guarantors to:
(a)
maintain at all times the Minimum Liquidity Account and all deposit accounts, disbursement
accounts, investment accounts (and other similar cash or bank accounts) and lockboxes located in the U.S. or non-
U.S. and held by any Subsidiary Guarantor with a bank or financial institution, except as permitted pursuant to
clause (b) below, that has executed and delivered to the Administrative Agent an account control agreement (or,
in respect of an account in the United Kingdom and Ireland, evidence that each relevant Obligor delivered to the
relevant account bank a notice of assignment in respect of the account and has used reasonable endeavors to
ensure that each Account Bank acknowledges the notice), in form and substance reasonably acceptable to the
Administrative Agent (each of the Minimum Liquidity Account and such deposit account, disbursement account,
investment account (or other similar cash or bank account) and lockbox, a “Controlled Account”); each such
Controlled Account shall secure payment of the Obligations, and each Obligor shall have granted a Lien to the
Administrative Agent, for the benefit of the Secured Parties, over such Controlled Accounts. For the avoidance of
doubt, no account control agreements shall be required in respect of any bank account held in Ireland or England;
and
(b)
deposit promptly, and in any event no later than five (5) Business Days after the date of receipt
thereof (if and to the extent received), all cash, checks, drafts or other similar items of payment relating to or
constituting payments made in respect of any and all accounts receivable, Contracts or any other rights and
interests into the applicable Controlled Accounts.
Notwithstanding the foregoing or in any Notes Document to the contrary, neither the Issuer nor any of its
Subsidiaries shall be required to obtain an account control agreement (or, in respect of an account in the United
Kingdom and Ireland, evidence that each relevant Obligor delivered to the relevant account bank a notice of
assignment in respect of the account) for any deposit accounts, disbursement accounts, investment accounts (and
other similar cash or bank accounts) and lockboxes that (i) in respect of the Irish Subsidiary Guarantor, are
established and maintained in connection with any IDA Grant, in an amount not to exceed €2,200,000 in
aggregate at any one
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time or (ii) in respect of the English Guarantor, are for the sole purpose of holding cash or cash equivalents that
serves as collateral security under any letter of credit or other obligation not prohibited by this Agreement.
8.17 Title, Headleases, Power to Remedy. The Issuer shall, and shall cause each of its Subsidiaries to, (i)
exercise its rights and comply in all respects with any covenant, stipulation or obligation (restrictive or otherwise)
at any time affecting a Manufacturing Facility, (ii) exercise its rights and comply with its obligations under each
Headlease in a proper and timely manner, (iii) use its reasonable endeavours to ensure that each landlord complies
with its obligations under each Headlease in a proper and timely manner, (iv) if so required by the Administrative
Agent, apply for relief against forfeiture of any Headlease in a proper and timely manner, and (v) in the event that
an Obligor fails to perform any obligations under the Notes Documents affecting its Manufacturing Facility, that
Obligor must allow the Administrative Agent or its agents and contractors (A) to enter any part of its
Manufacturing Facility, (B) to comply with or object to any notice served on the Obligor in respect of its
Manufacturing Facility and (C) to take any action that the Administrative Agent may reasonably consider
necessary or desirable to prevent or remedy any breach of any such term or to comply with or object to any such
notice.
8.18 Register of Mortgages and Charges. The Issuer shall, within three (3) Business Days of the Closing
Date, update its register of mortgages and charges to reflect the security granted by the Issuer pursuant to the
applicable Security Documents, in form and substance reasonably satisfactory to the Administrative Agent.
8.19
Post-Closing Covenants.
(a)
Within twenty (20) Business Days of the Closing Date (or such later date as an Independent
Appraiser may reasonably request or as the Administrative Agent may agree in its reasonable discretion), the
Administrative Agent shall have received a valuation and appraisal report, prepared by an Independent Appraiser
instructed and appointed by the Administrative Agent (the “Valuation Report”), which report shall be in scope
and substance reasonably satisfactory to the Administrative Agent and shall confirm the fair market value of:
(i)
(ii)
the London Manufacturing Facility is not less than [***] (or Equivalent Amount); and
the Shannon Manufacturing Facility is not less than [***] (or Equivalent Amount).
(b)
If the fair market value of the London Manufacturing Facility confirmed by the Valuation Report
exceeds [***] (or Equivalent Amount) then within 10 Business Days of the receipt of the Valuation Report by the
Issuer, the Issuer shall have delivered to the Administrative Agent an endorsement of:
(i)
the Dual Asset no-search insurance policy dated 29 July 2022 (with reference 00-
87868222N0); and
(ii)
the Dual Asset title insurance policy dated 14 December 2018 and varied by an
endorsement dated 29 July 2022 (with reference 00-39858418K0),
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increasing the indemnity limit of each policy from [***] to the sum equal to the fair market value of the
London Manufacturing Facility confirmed by the Valuation Report (or Equivalent Amount) and the Issuer shall
pay the premium for each endorsement when it falls due.
(c)
Within six (6) weeks of the issue of a certificate of practical completion in relation to the Works,
the Issuer shall furnish to the Noteholders and their solicitors copies of the following:
(i)
an architect’s opinion on compliance with planning permission and an architect's opinion on
compliance with the building regulations in RIAI format which shall include all confirmations and other
documents referred to or relied upon therein;
(ii)
a copy of any approvals, consents, permissions and licences of any competent authority that
may from time to time be required to enable the Issuer to commence and carry out the Works including without
limitation any planning permission, commencement notice, fire safety certificate or disability access certificate
required by the Building Control Acts 1990 to 2014 required or obtained in relation to the Works (the “Requisite
Consents”);
(iii)
a copy of the receipts for any financial contributions payable by the Issuer pursuant to the
Requisite Consents; and
(iv)
(Amendment) Regulations 2014.
certificate of compliance on completion within the meaning of the Building Control
(d) Within thirty (30) Business Days of the Closing Date, (or such later date as the Administrative
Agent may agree in its reasonable discretion), the Issuer shall deliver to the Administrative Agent short form
security agreements, in form and substance reasonably satisfactory to the Administrative Agent, evidencing a
grant of security over Issuer’s rights to insurance proceeds.
8.20 Undertaking to list. The Issuer shall use reasonable endeavours to list all the Notes hereunder on a
Recognised Stock Exchange promptly following issuance and in any event prior to February 2, 2023, and
thereafter to maintain a listing of all the Notes hereunder on a Recognised Stock Exchange for so long as such
Notes are outstanding; provided that if the Issuer is unable to obtain admission to such listing or if at any time the
Issuer determines that it will not maintain such listing, it will use its reasonable endeavours to obtain (prior to the
delisting of the Notes from such Recognised Stock Exchange) and thereafter maintain a listing of such Notes on
another Recognised Stock Exchange.
SECTION 9
NEGATIVE COVENANTS
The Obligors jointly and severally covenant and agree with the Administrative Agent and the Noteholders
that, until the Commitments have expired or been terminated and all Obligations (other than inchoate
indemnification and expense reimbursement obligations for which no Claim has been made) have been paid in full
in cash:
Indebtedness. The Issuer shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or
9.01
permit to exist any Indebtedness, whether directly or indirectly, except:
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(a)
the Obligations;
(b)
Indebtedness existing on the Closing Date and set forth on Schedule 7.13 and Permitted
Refinancings thereof; provided that, in each case, such Indebtedness is subordinated to the Obligations on terms
reasonably satisfactory to the Administrative Agent;
(c)
accounts payable to trade creditors for goods and services and current operating liabilities (not the
result of the borrowing of money) incurred in the ordinary course of the Issuer’s or such Subsidiary’s business in
accordance with customary terms and paid within one hundred twenty (120) days of becoming due, unless
contested in good faith by appropriate proceedings and reserved for in accordance with GAAP for any such
amounts over $5,000,000;
(d)
Indebtedness consisting of guarantees resulting from the endorsement of negotiable instruments for
collection in the ordinary course of business;
(e)
Indebtedness of any Obligor owing to any of its Subsidiaries or to another Obligor; provided that,
in each case, such Indebtedness is subordinated to the Obligations subject to the Intercompany Subordination
Agreement;
(f)
Guarantees by any Obligor of outstanding Permitted Indebtedness of any other Obligor; provided
that to the extent that any such Permitted Indebtedness is subordinated to the Obligations, such Guarantees shall
be similarly subordinated;
(g)
ordinary course of business equipment financing, leasing and Capital Lease Obligations; provided
that (i) if secured, the collateral therefor consists solely of the assets being financed, the products and proceeds
thereof and books and records related thereto, and (ii) the aggregate outstanding principal amount of such
Indebtedness does not exceed $7,000,000 (or the Equivalent Amount in other currencies) in the aggregate at any
time;
(h)
Indebtedness under Hedging Agreements permitted by Section 9.05(e);
(i)
with respect to any Permitted Acquisition, Indebtedness assumed in connection with such
Permitted Acquisition; provided that, (i) no such Indebtedness shall have been created or incurred in connection
with, or in contemplation of, such Acquisition or this Section 9.01(i), and (ii) the aggregate amount of
Indebtedness permitted pursuant to this Section 9.01(i) shall not exceed $5,000,000 (or the Equivalent Amount in
other currencies) at any time outstanding, inclusive of all related Contingent Acquisition Obligations;
(j)
Indebtedness consisting of the financing of insurance premiums in respect of insurance policies
insuring assets or businesses of an Obligor written or arranged in such Obligor’s ordinary course of business;
(k)
Indebtedness incurred in connection with cash management services, including treasury,
depository, overdraft, credit or debit card, purchasing cards, electronic funds transfer, automatic clearing house
arrangements, cash pooling arrangements, netting services, over draft protections, merchant services and other
cash management and similar arrangements of an Obligor or any of its Subsidiaries, in each case incurred in the
ordinary course of business;
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(l)
Indebtedness incurred under performance, surety, bid, statutory and appeal bonds, completion
guarantees and other similar obligations, in each case in the ordinary course of business;
(m)
Indebtedness in respect of worker’s compensation claims, payment obligations in connection with
health, disability or other types of social security benefits, unemployment or other insurance obligations and
reclamation and statutory obligations, in each case incurred in the ordinary course of business;
(n)
Indebtedness in respect of letters of credit, bank guarantees or similar instruments incurred in the
ordinary course of business; provided that the aggregate face amount of all such letters of credit, bank guarantees
or other instruments (including letters of credit outstanding on the Closing Date) shall not exceed $5,000,000 at
any time outstanding;
(o)
Indebtedness consisting of Investments permitted pursuant to Section 9.05;
(p)
Permitted Convertible Indebtedness; provided that the aggregate amount of all such Indebtedness
permitted pursuant to this Section 9.01(p) shall not exceed $150,000,000 (or the Equivalent Amount in other
currencies) at any time outstanding;
(q)
(r)
advances or deposits from customers or vendors received in the ordinary course of business;
Indebtedness incurred in connection with IDA Grants not to exceed €2,200,000 in the aggregate at
any time outstanding; and
(s)
other unsecured Indebtedness in an aggregate amount not to exceed $5,000,000 in the aggregate at
any time outstanding.
9.02 Liens. The Issuer shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or permit
to exist any Lien on any property now owned by it or such Subsidiary, except:
(a)
Liens securing the Obligations;
(b)
any Lien on any property or asset of the Issuer or any of its Subsidiaries existing on the Closing
Date and set forth on Schedule 9.02; provided that (i) no such Lien shall extend to any other property or asset of
the Issuer or any of its Subsidiaries and (ii) any such Lien shall secure only those obligations which it secures on
the Closing Date and extensions, renewals and replacements thereof that do not increase the outstanding principal
amount thereof;
(c)
Liens securing Indebtedness permitted under Section 9.01(g); provided that such Liens are
restricted solely to the collateral permitted to be secured by Section 9.01(g);
(d)
Liens imposed by any applicable Law arising in the ordinary course of business, including (but not
limited to) carriers’, warehousemen’s and mechanics’ liens, materialmen and other similar Liens arising in the
ordinary course of business and which (x) do not in the aggregate materially detract from the value of the property
subject thereto or materially impair the use thereof in the operations of the business of such Person or (y) are
being contested in good faith by
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appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property
subject to such Liens and for which adequate reserves have been made if required in accordance with GAAP;
(e)
pledges or deposits made in the ordinary course of business in connection with (i) real property
leases entered into in the ordinary course of business, (ii) obligations in respect of workers’ compensation,
unemployment insurance or other similar social security legislation, to the extent permitted pursuant to Section
9.01(m), or (iii) obligations in respect of surety or appeal bonds, bid or performance bonds, or other obligations of
a like nature, to the extent permitted pursuant to Section 9.01(l);
(f)
Liens securing Taxes, assessments and other governmental charges, the payment of which is not
yet due or is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted
and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been
made;
(g)
servitudes, easements, rights of way, restrictions and other similar encumbrances on real property
imposed by any applicable Law or by any lease pursuant to which an Obligor holds its interest in a Manufacturing
Facility and Liens consisting of zoning or building restrictions, easements, licenses, restrictions on the use of
property or minor imperfections in title thereto which, in the aggregate, are not material, and which do not in any
case materially detract from the value of the property subject thereto or interfere in any material respects with the
ordinary conduct of the business of any of the Obligors or any of their Subsidiaries;
(h)
with respect to any real property, (i) such defects or encroachments as might be revealed by an up-
to-date survey of such real property; (ii) the reservations, limitations, provisos and conditions expressed in the
original grant, deed or patent of such property by the original owner of such real property pursuant to applicable
Law or expressed in any lease pursuant to which an Obligor holds its interest in a Manufacturing Facility; (iii)
rights of expropriation, access or user or any similar right conferred or reserved by or in any applicable Law,
which, in the aggregate for clauses (i), (ii) and (iii), are not material, and which do not in any case materially
detract from the value of the property subject thereto or interfere in any material respects with the ordinary
conduct of the business of any of the Obligors or its Subsidiaries and (iv) leases or subleases of real property in
the ordinary course of business;
(i)
bankers’ liens, rights of setoff and similar Liens incurred on deposits made to a bank on deposit
accounts to the extent permitted to be made hereunder in the ordinary course of business;
(j)
any judgment Lien not constituting an Event of Default;
(k)
interests of lessors and sublessors under operating leases, interests of licensors or sublicensors
under license agreements, and with respect to any realty occupied by any Obligor or any of its Subsidiaries, all
easements, rights of way, reservations, licenses, covenants encroachments, variations and similar restrictions,
charges and encumbrances on title that, in any such case or event, do not secure monetary obligations (other than
any Permitted Lien set out in Schedule 9.02) and do not materially impair the use of such property for its intended
purposes;
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(l)
Liens on cash held on deposit to secure letters of credit, bank guarantees or similar instruments
permitted under Section 9.01(n) in an amount not to exceed the face amount of such letters of credit, bank
guarantees or similar instruments, so long as such cash is held in segregated accounts maintained with the issuers
of such letters of credit, bank guarantees or similar instruments;
(m)
Liens securing Indebtedness permitted under Section 9.01(i); provided that (i) such Lien is not
created in contemplation of or in connection with such Permitted Acquisition or this Agreement, (ii) such Lien
shall not apply to any other property or assets of the Issuer or any of its Subsidiaries other than the property or
assets being acquired pursuant to such Permitted Acquisition, (iii) such Lien shall secure only those obligations
that it secured immediately prior to the consummation of such Permitted Acquisition and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount thereof and (iv) such Lien does not
secure any Contingent Acquisition Obligation;
(n)
(i) Liens arising from rights of licensees or licensors, as the case may be, arising under licenses
permitted pursuant to Section 9.19, and (ii) any ordinary course interest or title of a licensor, sublicensor, lessor or
sublessor with respect to any assets under any inbound license or lease agreement permitted pursuant to Section
9.19;
(o)
Liens securing Indebtedness permitted by Section 9.01(j); provided that such Lien shall be solely
limited to the applicable insurance policies, supporting documentation relating thereto and the Obligor’s right to
receive proceeds under such insurance policy with respect to which such Indebtedness has been incurred;
(p)
Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
(q)
(r)
(s)
Liens referred to in any Certificate of Title;
Liens securing Indebtedness permitted under Section 9.01(r); or
Liens on the Specified Assets so long as the Specified Assets Conditions are satisfied both
immediately before and after giving effect to the creation of any such Lien.
9.03
Fundamental Changes, Acquisitions, Etc. The Issuer shall not, and shall not permit any of its
Subsidiaries to, (i) enter into any transaction of merger, amalgamation or consolidation, (ii) liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution), (iii) sell or issue any Disqualified Equity Interests, or (iv)
other than Permitted Acquisitions, make any Acquisition or otherwise acquire any business or substantially all the
property from, or Equity Interests of, or be a party to any Acquisition of, any Person, except, so long as no Event
of Default has occurred and is continuing or could reasonably be expected to occur as a result therefrom, for the
following:
(a)
(b)
Investments permitted under Section 9.05;
any Permitted Acquisitions;
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(c)
the merger, amalgamation or consolidation of (i) any Subsidiary with or into any Obligor; provided
that with respect to any such transaction involving the Issuer or any other Obligor, the Issuer or such Obligor, as
the case may be, must be the surviving or successor entity of such transaction and (ii) any Immaterial Subsidiary
with or into any other Immaterial Subsidiary;
(d)
the sale, lease, transfer or other disposition by any Subsidiary of any or all of its property (upon
voluntary liquidation or otherwise) to any other Obligor;
(e)
(i) the sale, lease, transfer or other disposition by any Immaterial Subsidiary of any or all of its
property (upon voluntary liquidation or otherwise) to any other Immaterial Subsidiary or to any Obligor, or (ii) the
sale, transfer or other disposition of the Equity Interests of any Immaterial Subsidiary to any other Immaterial
Subsidiary or to any Obligor; and
(f)
the issuance, sale, transfer or other disposition of the Equity Interests of any Subsidiary Guarantor
to any other Obligor.
9.04 Lines of Business. The Issuer shall not, and shall not permit any of its Subsidiaries to, engage in any
business other than the business engaged in on the Closing Date by such Persons or a business reasonably related
or ancillary thereto or a reasonable extension thereof.
Investments. The Issuer shall not, and shall not permit any of its Subsidiaries to, make, directly or
9.05
indirectly, or permit to remain outstanding any Investments except:
(a)
Investments outstanding on the Closing Date and identified on Schedule 9.05 and any
modification, replacement, renewal or extension thereof to the extent not involving new or additional Investments;
(b)
extensions of credit in the nature of accounts receivable or notes receivable arising from (i) the
sales of goods or services in the ordinary course of business and prepaid royalties, (ii) the satisfaction or partial
satisfaction thereof to the extent reasonably necessary in order to prevent or limit loss and any prepayments and
other credits to suppliers made in good faith and in the ordinary course of business or (iii) the satisfaction, partial
satisfaction or enforcement of Indebtedness or Claims due or owing to an Obligor or its Subsidiaries (in
bankruptcy of customers or suppliers or otherwise outside the ordinary course of business) or as security for any
such Indebtedness or Claims in good faith and in the ordinary course of business;
(c)
Permitted Cash Equivalent Investments;
(d)
Investments by Issuer or any other Subsidiary of the Issuer in (i) the Issuer, (ii) any Subsidiary
Guarantor, or (iii) any other Subsidiary of the Issuer for (A) operating expenses incurred in the ordinary course of
business and consistent with past practices or (B) other Investments to any other Subsidiary of the Issuer;
provided that the fair value of all such Investments made pursuant to this clause (iii)(B) shall not exceed
$2,000,000 in the aggregate per fiscal year;
(e)
Hedging Agreements entered into in the Issuer’s or any of its Subsidiaries’ ordinary course of
business for the purpose of hedging currency risks or interest rate risks (but not for
83
speculative purposes) and in an aggregate notional amount for all such Hedging Agreements not in excess of
$5,000,000 (or the Equivalent Amount in other currencies);
(f)
Investments consisting of prepaid expenses, negotiable instruments held for collection or deposit,
security deposits with utilities and landlords to secure office space and other like Persons and deposits in
connection with workers’ compensation and similar deposits, in each case, made in the ordinary course of
business;
(g)
employee loans, travel advances and guarantees in accordance with the Issuer’s usual and
customary practices with respect thereto (if permitted by applicable Law) which in the aggregate shall not exceed
$1,000,000 outstanding at any time (or the Equivalent Amount in other currencies);
(h)
Investments received in connection with any Insolvency Proceedings in respect of any customers,
suppliers or clients and in settlement of delinquent obligations of, and other disputes with, customers, suppliers or
clients;
(i)
(j)
Investments permitted under Section 9.03;
advances and extensions of credit (including to trade creditors) in the nature of trade payables
made in connection with the purchases of goods or services in the ordinary course of business;
(k)
Investments made or acquired as a result of consideration received in connection with any Asset
Sale permitted under Section 9.09 or Permitted Acquisition; provided that all such Investments made pursuant to
this clause (k) shall not exceed €2,200,000 in the aggregate since the Closing Date;
(l)
Investments in the form of non-cash loans and advances in an aggregate amount not to exceed
$2,500,000 outstanding at any one time to employees, officers, and directors of any Obligor or any of its
Subsidiaries for the purpose of purchasing Qualified Equity Interests in the Issuer so long as the proceeds of such
loans are used in their entirety to purchase such Qualified Equity Interests in the Issuer;
(m)
the entry into and payment of any premium in connection with any Permitted Bond Hedge
Transaction;
(n)
Investments involving the Specified Assets so long as the Specified Assets Conditions are met and
satisfied;
(o)
Investments in connection with IDA Grants in an aggregate amount not to exceed €2,200,000 at
any time outstanding;
(p)
Investments by the Obligors in Subsidiaries pursuant to Tax sharing arrangements, transfer pricing
arrangements or cost plus arrangements, in each case, solely as between or among the Obligors and one or more
of their Subsidiaries; and
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(q)
other Investments in an aggregate amount not to exceed $2,500,000 in the aggregate since the
Closing Date.
9.06 Restricted Payments. The Issuer shall not, and shall not permit any of its Subsidiaries to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment; provided that the following
Restricted Payments shall be permitted so long as no Event of Default has occurred and is continuing or could
reasonably be expected to occur or result from such Restricted Payment:
(a)
dividends with respect to the Issuer’s Equity Interests payable solely in shares of its Qualified
Equity Interests (or the equivalent thereof);
(b)
the Issuer’s purchase, redemption, retirement or other acquisition of its Equity Interests that (i) with
respect to any such Person, the aggregate purchase, redemption, retirement or other acquisition cost or price does
not exceed $1,000,000 in the aggregate since the Closing Date and (ii) with respect to all such purchases,
redemptions, retirements or other acquisitions made pursuant to this Section 9.06(b) since the Closing Date, the
aggregate cost or price does not exceed $4,000,000;
(c)
dividends paid by any Subsidiary Guarantor to any other Obligor;
(d)
upon the death, incapacity or termination of any natural person that is a holder of Qualified Equity
Interests of the Issuer or the exercise of a right of first refusal or similar right in respect of any such holder, the
Issuer may repurchase the stock of such Qualified Equity Interests of such holder or such holder’s family, trusts,
estates and heirs pursuant to stock repurchase agreements in an amount not to exceed $1,000,000 per fiscal year;
(e)
(f)
cash in lieu of the issuance of fractional shares not to exceed $1,000,000 per fiscal year;
dividends paid by any Immaterial Subsidiary to any other Immaterial Subsidiary or to any Obligor;
(g)
repurchases of Qualified Equity Interests deemed to occur upon the exercise of stock options or
warrants if such repurchased Qualified Equity Interests represents a portion of the exercise price of such options
or warrants pursuant to a “cashless exercise” or similar feature;
(h)
repurchases of Qualified Equity Interests deemed to occur upon withholding of a portion of the
Qualified Equity Interests granted or awarded to a current or former director, officer, employee or consultant to
pay for the taxes payable by such Person upon such grant or award (or upon vesting thereof); provided that, in
each case, no such repurchases shall exceed $1,000,000 per year (calculated since the Closing Date), in the
aggregate for all employees; and
(i)
(i) the payment of the purchase price of any Permitted Bond Hedge Transaction or (ii) the
settlement, unwinding or termination of all or any portion of any Permitted Warrant Transaction by (I) set-off
against the concurrent settlement, unwind or other termination of all or any portion of any related Permitted Bond
Hedge Transaction or (II) delivery of ordinary shares.
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Notwithstanding anything to the contrary in the foregoing, the issuance of, performance of obligations under
(including any payments of interest), and conversion, exercise, repurchase, redemption (including, for the
avoidance of doubt, a required repurchase in connection with the redemption of Permitted Convertible
Indebtedness upon satisfaction of a condition related to the stock price of the ordinary shares), settlement or early
termination or cancellation of (whether in whole or in part and including by netting or set-off) (in each case,
whether in cash, ordinary shares, following a merger event or other change of the ordinary shares, other securities
or property), or the satisfaction of any condition that would permit or require any of the foregoing, any Permitted
Convertible Indebtedness shall not constitute a Restricted Payment by the Issuer for the purposes of this Section
9.06; provided that, to the extent both (a) the aggregate amount of cash payable upon conversion or payment of
any Permitted Convertible Indebtedness (excluding any required payment of interest with respect to such
Permitted Convertible Indebtedness and excluding any payment of cash in lieu of a fractional share due upon
conversion thereof) exceeds the aggregate principal amount thereof and (b) such conversion or payment does not
trigger or correspond to an exercise or early unwind or settlement of a corresponding portion of the Permitted
Bond Hedge Transactions relating to such Permitted Convertible Indebtedness (including, for the avoidance of
doubt, the case where there is no Bond Hedge Transaction relating to such Permitted Convertible Indebtedness),
the payment of such excess cash shall not be permitted by this paragraph.
Notwithstanding the foregoing, the Issuer may repurchase, exchange or induce the conversion of Permitted
Convertible Indebtedness by delivery of shares of ordinary shares and/or a different series of Permitted
Convertible Indebtedness and/or by payment of cash (in an amount that does not exceed the proceeds received by
Issuer from the substantially concurrent issuance of ordinary shares and/or Permitted Convertible Indebtedness
plus the net cash proceeds, if any, received by Issuer pursuant to the related exercise or early unwind or
termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any,
pursuant to the immediately following proviso); provided that, substantially concurrently with, or a commercially
reasonable period of time before or after, the related settlement date for the Permitted Convertible Indebtedness
that is so repurchased, exchanged or converted, Issuer shall exercise or unwind or terminate early (whether in
cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted
Warrant Transactions, if any, corresponding to such Permitted Convertible Indebtedness that are so repurchased,
exchanged or converted.
Payments of Indebtedness. The Issuer shall not, and shall not permit any of its Subsidiaries to, make any
9.07
payments in respect of any Indebtedness other than (i) payments of the Obligations and (ii) scheduled or other
mandatory payments of other Permitted Indebtedness (other than any Permitted Convertible Indebtedness) that are
not otherwise prohibited or limited pursuant to any subordination or similar contract that is binding upon the
Issuer, any such Subsidiary or any holder of such Permitted Indebtedness.
Notwithstanding anything to the contrary in the foregoing, the issuance of, performance of obligations under
(including any payments of interest), and conversion, exercise, repurchase, redemption (including, for the
avoidance of doubt, a required repurchase in connection with the redemption of Permitted Convertible
Indebtedness upon satisfaction of a condition related to the stock price of the ordinary shares), settlement or early
termination or cancellation of (whether in whole or in part and including by netting or set-off) (in each case,
whether in cash, ordinary shares, following a merger event or other change of the ordinary shares, other securities
or property), or
86
the satisfaction of any condition that would permit or require any of the foregoing, any Permitted Convertible
Indebtedness shall not violate this Section 9.07; provided that, to the extent both (a) the aggregate amount of cash
payable upon conversion or payment of any Permitted Convertible Indebtedness (excluding any required payment
of interest with respect to such Permitted Convertible Indebtedness and excluding any payment of cash in lieu of a
fractional share due upon conversion thereof) exceeds the aggregate principal amount thereof and (b) such
conversion or payment does not trigger or correspond to an exercise or early unwind or settlement of a
corresponding portion of the Permitted Bond Hedge Transactions relating to such Permitted Convertible
Indebtedness (including, for the avoidance of doubt, the case where there is no Bond Hedge Transaction relating
to such Permitted Convertible Indebtedness), the payment of such excess cash shall not be permitted by the
preceding sentence.
Notwithstanding the foregoing, Issuer may repurchase, exchange or induce the conversion of Permitted
Convertible Indebtedness by delivery of shares of ordinary shares and/or a different series of Permitted
Convertible Indebtedness and/or by payment of cash (in an amount that does not exceed the proceeds received by
Issuer from the substantially concurrent issuance of ordinary shares and/or Permitted Convertible Indebtedness
plus the net cash proceeds, if any, received by Issuer pursuant to the related exercise or early unwind or
termination of the related Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any,
pursuant to the immediately following proviso); provided that, substantially concurrently with, or a commercially
reasonable period of time before or after, the related settlement date for the Permitted Convertible Indebtedness
that is so repurchased, exchanged or converted, Issuer shall exercise or unwind or terminate early (whether in
cash, shares or any combination thereof) the portion of the Permitted Bond Hedge Transactions and Permitted
Warrant Transactions, if any, corresponding to such Permitted Convertible Indebtedness that are so repurchased,
exchanged or converted.
9.08 Change in Fiscal Year. The Issuer shall not, and shall not permit any of its Subsidiaries to, change the last
day of its fiscal year from that in effect on the Closing Date, except to change the fiscal year of a Subsidiary
acquired in connection with a Permitted Acquisition to conform its fiscal year to that of the Issuer.
9.09
Sales of Assets, Etc. Except as set forth below, the Issuer shall not, and shall not permit any of its
Subsidiaries to sell, lease, transfer, or otherwise dispose of any of its assets or property (including accounts
receivable, Material Intellectual Property or Equity Interests of Subsidiaries), grant or enter into any Exclusive
License (other than any Exclusive License that is not prohibited by this Agreement), forgive, release or
compromise any amount owed to the Issuer or such Subsidiary, in each case, in one transaction or series of
transactions (any thereof, an “Asset Sale”); provided that Asset Sales of the type described in clauses (c), (d), (e),
(f), (i), (l) and (m) shall only be permitted so long as no Event of Default has occurred or could reasonably be
expected to result from such Asset Sale:
(a)
(b)
sales of inventory in the ordinary course of its business on ordinary business terms;
the forgiveness, release or compromise of any amount owed to any Obligor or Subsidiary in the
ordinary course of business;
(c)
transfers of assets or property by any Subsidiary to an Obligor;
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(d)
transfers of assets or property by an Immaterial Subsidiary to any other Immaterial Subsidiary;
(e)
Business;
dispositions of any assets or property that is obsolete or worn out or no longer used or useful in the
(f)
in connection with any transaction permitted under Sections 9.02, 9.03, 9.05 or 9.06 or 9.10;
(g)
the sale, assignment, transfer, disposition or discount, in each case, without recourse, of accounts
receivable arising in the ordinary course of business that have been written down by the Issuer acting in good faith
and consistent with its historical collection practices;
(h)
any dispositions as a result of any involuntary loss, damage or destruction of property as a result of
a Casualty Event or transfers of property to insurance companies in exchange for casualty insurance proceeds;
(i)
the sale or issuance of Qualified Equity Interests of the Issuer and the issuance by any of the
Issuer’s Subsidiaries of Qualified Equity Interests to the Issuer or any Obligor;
(j)
the abandonment of issued Patents, issued Trademarks and issued Copyrights of the Issuer and its
Subsidiaries to the extent such issued Patents, issued Trademarks and issued Copyrights do not qualify as Material
Intellectual Property and are not in the good faith judgment of the Issuer useful to, or required in, the conduct of
the business of the Obligors or any of their Subsidiaries;
(k)
the abandonment or other disposition of a lease or sublease of real property that is, in the
commercially reasonable judgment of the Issuer, not used or useful in the conduct of the business of the Obligors
or any of their Subsidiaries;
(l)
licenses, development and other collaborative agreements where such arrangement provide for the
license of Patents, Trademarks, Copyrights and other Intellectual Property Rights to the extent permitted pursuant
to Section 9.19 hereof;
(m)
dispositions of property to the extent that such property is exchanged for credit against the
purchase price of similar replacement property;
(n)
and satisfied; and
dispositions or licenses of the Specified Assets so long as the Specified Assets Conditions are met
(o)
dispositions of assets (other than accounts receivable or Intellectual Property) not otherwise
permitted pursuant to clauses (a) through (n) above; provided that such dispositions are made at fair market value
for cash and the aggregate fair market value of all assets disposed of in all such dispositions (including the
proposed disposition) would not exceed $2,500,000 in the aggregate since the Closing Date.
9.10 Transactions with Affiliates. The Issuer shall not, and shall not permit any of its Subsidiaries to, sell,
lease, license or otherwise transfer any assets to, or purchase, lease, license
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or otherwise acquire any assets from, or otherwise engage in any other transactions or arrangements with, any of
its Affiliates, except:
(a)
transactions between or among Obligors and their Subsidiaries to the extent permitted hereunder
(including, for the avoidance of doubt, any such transactions that are permitted by Section 9.05);
(b)
customary compensation and indemnification of, and other employment arrangements with,
directors, officers and employees of the Issuer or any of its Subsidiaries in the ordinary course of business;
(c)
payments by the Obligors and their Subsidiaries pursuant to Tax sharing arrangements, transfer
pricing arrangements or cost plus arrangements, in each case, solely as between or among the Obligors and one or
more of their Subsidiaries;
(d)
hereunder;
(e)
(f)
issuance of Qualified Equity Interests not resulting in a Change of Control and otherwise permitted
transactions between or involving Perceptive Credit Holdings III, LP and its Affiliates;
transactions in connection with the Janssen Collaboration Agreement; and
(g)
any other transaction of any Obligor or any of its Subsidiaries that is (i) on fair and reasonable
terms that are no less favorable (including with respect to the amount of cash or other consideration receivable or
payable in connection therewith) to such Obligor or such Subsidiary, as applicable, than it could obtain in an
arm’s-length transaction with a Person that is not an Affiliate of such Obligor or such Subsidiary and (ii) of the
kind which would be entered into by a prudent Person in the position of such Obligor or such Subsidiary, as
applicable, with another Person that is not an Affiliate of such Obligor or such Subsidiary, as applicable.
9.11 Restrictive Agreements. The Issuer shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, enter into, incur or permit to exist any Restrictive Agreement other than (i) restrictions and conditions
imposed by applicable Laws or by the Notes Documents, (ii) customary restrictions and conditions contained in
agreements relating to an Asset Sale permitted pursuant to Section 9.09; provided that such restrictions and
conditions apply only to the Subsidiary or property or asset that is to be sold and were not created or imposed in
contemplation of this Agreement, (iii) restrictions and conditions imposed by any agreement relating to Permitted
Indebtedness that is secured by a Permitted Lien so long as such restrictions or conditions apply only to the
property or assets securing such Permitted Indebtedness and were not created or imposed in contemplation of this
Agreement, (iv) any agreement or restriction or condition in effect at the time any Person becomes a Subsidiary
pursuant to a Permitted Acquisition, so long as such agreement or restriction or condition was not entered into in
contemplation of such Person becoming a Subsidiary and does not extend to any assets, properties or businesses
other than those acquired pursuant to such Permitted Acquisition, (v) customary provisions in leases and subleases
entered into in compliance with Section 9.13 or licenses entered into in compliance with Section 9.19, in either
case restricting the assignment thereof or restricting the grant of Liens in such lease, sublease or license, as the
case may be, (vi) restrictions on pledges or deposits made in the ordinary
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course of business in connection with leases or obligations permitted pursuant to Section 9.02(e), and (vii)
Restrictive Agreements set forth on Schedule 7.15; provided further that, any term or provision of the foregoing
notwithstanding, no such Restrictive Agreement otherwise permitted under this Section shall be permitted in the
event it in any way restricts, prohibits or otherwise prevents (x) the execution, delivery and performance of the
Obligations or any Secured Party’s rights or remedies in respect thereof, (y) the exercise of remedies by the
Administrative Agent against the Issuer or any Subsidiary following an Event of Default as contemplated by the
Notes Documents or (z) the performance of the obligations of the Issuer pursuant to Section 8.12 hereof.
9.12 Modifications of Organic Documents; Termination of Material Agreements.. The Issuer shall not, and
shall not permit any of its Subsidiaries to:
(a)
waive, amend, terminate, replace or otherwise modify any term or provision of any Organic
Document that could reasonably be expected to have a negative adverse effect on (x) any Obligations or any
interests, rights or remedies of any Secured Party in respect of the Notes Documents or (y) any rights or remedies
of any Noteholder in respect of any Warrant Certificate (or, to the extent the Noteholder has exercised its rights
under any Warrant Certificate, such Noteholder’s rights as a holder of the Issuer’s Equity Interests) except, for
purposes of this clause (y) only, to the extent such modification would not negatively adversely and
disproportionately affect such Noteholder when compared with the effect of such modification on all other holders
of the same series or class of Equity Interests; or
(b)
Except with respect to the Material Agreements set forth on Schedule 9.12(b), take or omit to take
any action that results in the termination of, or permits any other Person to terminate, any Material Agreement or;
or take any action that permits any Material Agreement to be terminated by any counterparty thereto prior to its
stated date of expiration, in each case, only to the extent such termination would negatively adversely and
disproportionately affect the Administrative Agent or the Noteholders.
9.13
Sales and Leasebacks. Except as disclosed on Schedule 9.13, the Issuer shall not, and shall not permit
any of its Subsidiaries to, become liable, directly or indirectly, with respect to any lease, whether an operating
lease or a Capital Lease Obligation, of any property (whether real, personal, or mixed), whether now owned or
hereafter acquired, (i) which such Person has sold or transferred or is to sell or transfer to any other Person and (ii)
which such Person intends to use for substantially the same purposes as property which has been or is to be sold
or transferred.
9.14 Hazardous Material. The Issuer shall not, and shall not permit any of its Subsidiaries to, use, generate,
manufacture, install, treat, release, store or dispose of any Hazardous Material, except in compliance with all
applicable Environmental Laws or where the failure to comply, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
9.15 Accounting Changes. The Issuer shall not, and shall not permit any of its Subsidiaries to, make any
significant change in accounting treatment or reporting practices, except as required or permitted by GAAP.
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9.16 Compliance with ERISA. Neither Issuer nor any of its ERISA Affiliates shall cause or suffer to exist (i)
any event that could result in the imposition of a Lien with respect to any Title IV Plan or Multiemployer Plan or
(ii) any other ERISA Event that, in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. Neither the Issuer nor any of its Subsidiaries shall cause or suffer to exist any event that could result in the
imposition of a Lien with respect to any Benefit Plan that could reasonably be expected to result in a Material
Adverse Effect.
9.17
[Reserved].
9.18
Sanctions; Anti-Corruption Use of Proceeds. The Issuer shall not, directly or knowingly indirectly, use
the proceeds of the Notes, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint
venture partner or other Person, (i) in furtherance of an offer, payment, promise to pay, or authorization of the
payment or giving of money, or anything else of value, to any Person in violation of any applicable anti-corruption
Law, or (ii) (A) to fund any activities or business of or with any Person, that, at the time of such funding, is, or
whose government is, the subject of Sanctions or in any Designated Jurisdiction, or (B) in any other manner that
would result in a violation of Sanctions by any Person (including any Person participating in the Notes, whether as
Administrative Agent, Noteholder, underwriter, advisor, investor, or otherwise).
9.19
Inbound and Outbound Licenses.
(a)
Inbound Licenses. Except for the UCL Licenses and Janssen Collaboration Agreement, the Issuer
shall not, and shall not permit any of its Subsidiaries to, enter into or become bound by any inbound license
agreement that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect, which agreement, and that requires the Issuer or any of its Subsidiaries, as the case may be, during any
twelve (12) month period during the term of such license agreement, to make aggregate payments in excess of
[***] unless (i) the licensor under such license is a non-Affiliated third party and (ii) such license has been entered
into by the Issuer or one of its Subsidiaries as the case may be, in the ordinary course of business and the
commercial terms of such license otherwise comply with Section 9.10; provided that inbound license agreements
in the nature of ordinary course customer contracts, application programming interfaces (APIs), over the counter
software that are commercially available to the public shall not be prohibited by this clause (a).
(b)
Outbound Licenses. The Issuer shall not, and shall not permit any of its Subsidiaries to, enter into
or become bound by any outbound license of Material Intellectual Property that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect unless such outbound license (i) does not
impair the Administrative Agent or any Secured Party from fully exercising their respective rights in respect of
Collateral under any of the Notes Documents in the event of the exercise of remedies, including a disposition or
liquidation in connection with a foreclosure of any such Collateral, or any rights, assets or property related thereto,
and (ii) is not an Exclusive License; provided that, any term or provision of this Section 9.19(b) or otherwise in
this Agreement to the contrary notwithstanding, so long as the Specified Assets Conditions are met and satisfied
as of the effective time of any outbound license (or similar
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arrangement) of Specified Assets, this Section 9.19(b) shall not apply to any outbound license of Specified
Assets.
9.20 Title, Headleases, Development. The Issuer shall not, and shall not permit any of its Subsidiaries to, (i)
agree to any amendment, supplement, waiver, surrender or release of any covenant, stipulation or obligation
(restrictive or otherwise) at any time affecting a Manufacturing Facility, (ii) agree to any amendment, supplement,
waiver, surrender or release of any Headlease, (iii) exercise any right to break, determine or extend any Headlease,
(iv) agree to any rent review in respect of any Headlease, (v) do or allow to be done any act as a result of which
any Headlease may become liable to forfeiture or otherwise be terminated, (vi) do or allow to be done any act as a
result of which the Overage Deed may be amended or triggered or (vii) make or allow to be made any application
for planning permission in respect of any part of any Manufacturing Facility or carry out, or allow to be carried
out, any demolition, construction, structural alterations or additions, development or other similar operations in
respect of any part of any Manufacturing Facility, other than (A) the maintenance of the buildings, plant,
machinery, fixtures and fittings in accordance with the Notes Documents, (B) any alterations or improvements
which a tenant is entitled to undertake in accordance with the terms of the relevant Lease Document and in respect
of which an Obligor in its capacity as landlord is required to give its consent pursuant to the terms of that Lease
Document, (C) the carrying out of non-structural improvements or alterations which affect only the interior of any
building on any Manufacturing Facility or (D) as disclosed in the Certificate of Title for the Shannon
Manufacturing Facility and the continued planned buildout of the Shannon Manufacturing Facility up to an
aggregate principal amount of [***] pursuant to Issuer’s Board approved projected budget; provided that, to the
extent (A) through (D) do not apply, any such actions can be undertaken by the Issuer or its Subsidiaries with the
consent of the Administrative Agent (not to be unreasonably withheld or delayed).
SECTION 10
FINANCIAL COVENANTS
10.01 Minimum Liquidity. The Issuer shall at all times maintain a minimum aggregate balance of three million
dollars ($3,000,000) in cash and Permitted Cash Equivalent Investments in a Controlled Account maintained with
a commercial bank or similar deposit-taking institution in the U.S. (such Controlled Account, the “Minimum
Liquidity Account”) that is free and clear of all Liens, other than Permitted Liens.
10.02 Phase III Trial. The Issuer shall have enrolled in a Phase III trial for AAV–RPGR with Johnson &
Johnson on or before June 30, 2023.
10.03 Shannon Manufacturing Facility. The Shannon Manufacturing Facility meets or satisfies all applicable
“good manufacturing practice” requirements on or before December 31, 2023 and any additional quality standards
the facility markets or represents it satisfies, including without limitation cGMP.
11.01 Events of Default. Each of the following events shall constitute an “Event of Default”:
SECTION 11
EVENTS OF DEFAULT
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(a)
Principal or Interest Payment Default. The Issuer shall fail to pay any principal of the Notes,
when and as the same shall become due and payable, whether at the due date thereof, at a date fixed for
redemption thereof or otherwise.
(b)
Other Payment Defaults. Any Obligor shall fail to pay any Obligation (other than an amount
referred to in Section 11.01(a)) when and as the same shall become due and payable, and such failure shall
continue unremedied for a period of three (3) Business Days of the due date thereof.
(c)
Representations and Warranties. Any representation or warranty made or deemed made by or on
behalf of the Issuer or any of its Subsidiaries in or in connection with this Agreement or any other Notes
Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with this Agreement or any other Notes Document or any
amendment or modification hereof or thereof, shall, when taken as a whole: (i) prove to have been incorrect when
made or deemed made to the extent that such representation or warranty contains any materiality or Material
Adverse Effect qualifier; or (ii) prove to have been incorrect in any material respect when made or deemed made
to the extent that such representation or warranty does not otherwise contain any materiality or Material Adverse
Effect qualifier.
(d)
Certain Covenants. Any Obligor shall fail to observe or perform any covenant, condition or
agreement contained in Sections 8.02, 8.03 (with respect to the Issuer’s existence) 8.11, 8.12, 8.19, Section 9 or
Sections 10.01 or 10.02.
(e)
Other Covenants. Any Obligor shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in Section 11.01(a), 11.01(b) or 11.01(d)) or
any other Notes Document, and in the case of any failure that is capable of cure, such failure shall continue
unremedied for a period of thirty (30) or more days.
(f)
Payment Default on Other Indebtedness. Any Obligor or any of its Subsidiaries shall fail to
make any payment (whether of principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable after giving effect to any applicable grace or
cure period as originally provided by the terms of such Indebtedness.
(g)
Other Defaults on Other Indebtedness. Any material breach of, or “event of default” or similar
event under, any Contract governing any Material Indebtedness shall occur, or and shall continue after the
applicable grace period, if any, (x) that results in any Material Indebtedness becoming due prior to its scheduled
maturity or (y) that enables or permits (with or without the giving of notice, the lapse of time or both) the holder
or holders of such Material Indebtedness or any trustee or agent on its or their behalf to cause such Material
Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity; provided that this Section 11.01(g) shall not apply to (x) secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or assets securing such Material
Indebtedness, or (y) any redemption, exchange, repurchase, conversion or settlement with respect to any Permitted
Convertible Indebtedness, or satisfaction of any condition
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giving rise to or permitting the foregoing, pursuant to their terms unless such redemption, repurchase, conversion
or settlement results from a default thereunder or an event of the type that constitutes an Event of Default.
(h)
Insolvency, Bankruptcy, Etc.
(i)
Any Obligor does not or becomes unable to pay its debts or meet its liabilities as the same
become due, or admits in writing its inability to pay its debts generally, or declares any general moratorium on its
indebtedness, or enters into a compromise or arrangement or deed of company arrangement between it and any
class of its creditors.
(ii)
Any Obligor commits an act of bankruptcy or makes an assignment of its property for the
general benefit of its creditors or makes a proposal (or files a notice of its intention to do so).
(iii)
Any Obligor institutes any proceeding seeking to adjudicate it an insolvent, or seeking
liquidation, dissolution, winding-up, reorganization, compromise, arrangement, adjustment, protection,
moratorium, relief, stay of proceedings of creditors generally (or any class of creditors), or composition of it or its
debts or any other relief, under any applicable Law, whether U.S. or non-U.S., now or hereafter in effect relating
to bankruptcy, winding-up, insolvency, reorganization, receivership, examinership, plans of arrangement or relief
or protection of debtors or at common law or in equity, or files an answer admitting the material allegations of a
petition filed against it in any such proceeding (in each case, other than any liquidation, dissolution or winding-up
permitted pursuant to Section 9.03).
(iv)
Any Obligor applies for the appointment of, or the taking of possession by, a receiver,
interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator, trustee, liquidator,
provisional liquidator, voluntary administrator, receiver and manager or other similar official for it or any
substantial part of its property.
(v)
Any Obligor takes any action, corporate or otherwise, to approve, effect, consent to or
authorize any of the actions described in this Section 11.01(h), or otherwise acts in furtherance thereof or fails to
act in a timely and appropriate manner in defense thereof.
(vi)
Any petition is filed, application made or other proceeding instituted in a court of
competent jurisdiction against or in respect of any Obligor:
(A)
seeking to adjudicate it as insolvent;
(B)
seeking a receiving order against it;
(C)
seeking
liquidation, dissolution, winding-up,
reorganization, compromise,
arrangement, adjustment, protection, moratorium, relief, stay of proceedings of creditors generally (or any class of
creditors), deed of company arrangement or composition of it or its debts or any other relief under any applicable
Law, whether U.S. or non-U.S., now or hereafter in effect relating to bankruptcy, winding-up, insolvency,
reorganization, receivership, examinership, plans of arrangement or relief or protection of debtors or at common
law or in equity; or
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(D)
seeking the entry of an order for relief or the appointment of, or the taking of
possession by, a receiver, interim receiver, receiver/manager, sequestrator, conservator, custodian, administrator,
trustee, liquidator, provisional liquidator, voluntary administrator, receiver and manager or other similar official
for it or any substantial part of its property, and such petition, application or proceeding (i.e. clauses (A) through
(D) of this provision) continues undismissed, or unstayed and in effect, for a period of sixty (60) days after the
institution thereof; provided that if an order, decree or judgment is granted or entered (whether or not entered or
subject to appeal) against any Obligor thereunder in the interim, such grace period will cease to apply; provided,
further, that if such Obligor files an answer admitting the material allegations of a petition filed against it in any
such proceeding, such grace period will cease to apply.
(vii) Any other event occurs which, under the applicable Law of any applicable jurisdiction, has
an effect equivalent to any of the events referred to in Section 11.01(h).
(i)
Judgments. One or more final judgments for the payment of money in an aggregate amount in
excess of $2,000,000 (or the Equivalent Amount in other currencies) (exclusive of any amounts fully covered by
insurance (less any applicable deductible) and as to which the insurer has not rejected responsibility to cover such
judgment) shall be rendered against the Issuer or any Obligor or any combination thereof and the same shall
remain undismissed, unsatisfied or undischarged for a period of sixty (60) calendar days during which execution
shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon
any assets of any Obligor to enforce any such judgment.
(j)
ERISA and Pension Plans. An ERISA Event shall have occurred that, when taken together with
all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect.
(k)
(l)
have occurred.
Change of Control. A Change of Control shall have occurred.
Material Adverse Change, Etc. A Material Adverse Change or Material Adverse Effect shall
(m)
Impairment of Security, Etc. If any of the following events occurs, and with respect to the
following clause (i), other than as a result of the acts or omissions of the Administrative Agent or any Noteholder:
(i) any Lien created by any of the Security Documents shall at any time not constitute a valid and perfected Lien
on the applicable Collateral in favor of the Secured Parties, free and clear of all other Liens (other than Permitted
Liens) to the extent perfection is required herein or therein, other than solely as the result of any action(s) taken by
the Administrative Agent or the failure of the Administrative Agent to take any action(s) within its control, or any
combination thereof, which does not arise from a breach of any Notes Document by an Obligor, (ii) except for
expiration in accordance with its terms, any of the Security Documents or any Guarantee of any of the Obligations
(including that contained in Section 13) shall for whatever reason cease to be in full force and effect, or (iii) any
Obligor shall, directly or indirectly, contest in any manner such effectiveness, validity, binding nature or
enforceability of any such Lien or any Notes Document.
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11.02 Remedies. Upon the occurrence and during the continuance of any Event of Default, then, and in every
such event (other than an Event of Default described in Section 11.01(h)), the Administrative Agent may, by
notice to the Issuer, declare the Notes then outstanding to be due and payable in whole (or in part, in which case
any principal not so declared to be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Notes so declared to be due and payable, together with accrued interest thereon and
all fees and other Obligations, shall become due and payable immediately (in the case of the Notes, at the Early
Redemption Price therefor), without presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Obligor; and in case of an Event of Default described in Section 11.01(h), the principal of
the Notes then outstanding, together with accrued interest thereon and all fees and other Obligations, shall
automatically become due and payable immediately (in the case of the Notes, at the Early Redemption Price
therefor), without presentment, demand, protest or other notice of any kind, all of which are hereby waived by
each Obligor.
11.03 Additional Remedies. In the event any Event of Default has occurred and is continuing, if the Issuer or
any of its Subsidiaries shall be in uncured default under a Material Agreement, the Administrative Agent or the
Noteholders shall have the right (but not the obligation) to cause the default or defaults under such Material
Agreement to be remedied (including without limitation by paying any unpaid amount thereunder) and otherwise
exercise any and all rights of the Issuer or such Subsidiary, as the case may be, thereunder, as may be necessary to
prevent or cure any default. Without limiting the foregoing, upon any such default, the Issuer and each of its
Subsidiaries shall promptly execute, acknowledge and deliver to the Administrative Agent such instruments as
may reasonably be required of the Issuer or such Subsidiary to permit the Administrative Agent and the
Noteholders to cure any default under the applicable Material Agreement or permit the Administrative Agent and
the Noteholders to take such other action required to enable the Administrative Agent and the Noteholders to cure
or remedy the matter in default and preserve the interests of the Administrative Agent or Noteholders. Any
amounts paid by the Administrative Agent or Noteholders pursuant to this Section 11.04 shall be payable on
demand by Obligors, shall accrue interest at the Default Rate if not paid on demand, and shall constitute
“Obligations.”
SECTION 12
THE ADMINISTRATIVE AGENT
12.01 Appointment and Duties. Subject in all cases to clause (c) below:
(a)
Appointment of the Administrative Agent. Each of the Noteholders hereby irrevocably appoints
Perceptive Credit Holdings III, LP (together with any successor the Administrative Agent pursuant to Section
12.09) as the Administrative Agent hereunder and authorizes the Administrative Agent to (i) execute and deliver
the Notes Document and accept delivery thereof on its behalf from the Issuer or any of its Subsidiaries, (ii) take
such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly
delegated to the Administrative Agent under such Notes Document and (iii) exercise such powers as are
reasonably incidental thereto.
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(b)
Duties as Collateral and Disbursing Agent. Without limiting the generality of Section 12.01(a),
the Administrative Agent shall have the sole and exclusive right and authority (to the exclusion of the
Noteholders), and is hereby authorized, to (i) act as the disbursing and collecting agent for the Noteholders with
respect to all payments and collections arising in connection with the Notes Documents (including in any
proceeding described in Section 11.01(h) or any other bankruptcy, insolvency or similar proceeding); provided
that (i) the Administrative Agent shall only be required to act in such agency capacity if it has notified the Issuer
and the Noteholders in writing that it has elected to do so, and (ii) so long as the Administrative Agent has not
delivered any such election notice it shall not be deemed to be acting as a disbursing and collecting agent for any
other Noteholder or Secured Party and no Person (including any Withholding Agent) shall be authorized to make
any payment to the Administrative Agent for such purpose, (ii) file and prove claims and file other documents
necessary or desirable to allow the claims of the Secured Parties with respect to any Obligation in any proceeding
described in Section 11.01(h) or any other bankruptcy, insolvency or similar proceeding (but not to vote, consent
or otherwise act on behalf of such Secured Party), (iii) act as collateral agent for each Secured Party for purposes
of the perfection of all Liens created by such agreements and all other purposes stated therein, (iv) manage,
supervise and otherwise deal with the Collateral, (v) take such other action as is necessary or desirable to maintain
the perfection and priority of the Liens created or purported to be created by the Notes Documents, (vi) except as
may be otherwise specified in any Notes Document, exercise all remedies given to the Administrative Agent and
the other Secured Parties with respect to the Collateral, whether under the Notes Documents, applicable Laws or
otherwise and (vii) execute any amendment, consent or waiver under the Notes Documents on behalf of any
Noteholder that has consented in writing to such amendment, consent or waiver; provided that the Administrative
Agent hereby appoints, authorizes and directs each Noteholder to act as collateral sub-agent for the Administrative
Agent and the Noteholders for purposes of the perfection of all Liens with respect to the Collateral, including any
deposit account maintained by any Obligor with, and cash and Permitted Cash Equivalent Investments held by,
such Noteholder, and may further authorize and direct the Noteholders to take further actions as collateral sub-
agents for purposes of enforcing such Liens or otherwise to transfer the Collateral subject thereto to the
Administrative Agent, and each Noteholder hereby agrees to take such further actions to the extent, and only to
the extent, so authorized and directed.
(c)
Limited Duties. The Noteholders and the Obligors hereby each acknowledge and agree that the
Administrative Agent (i) has undertaken its role hereunder purely as an accommodation to the parties hereto and
the Transactions, (ii) is receiving no compensation for undertaking such role and (iii) subject only to the notice
provisions set forth in Section 12.09, may resign from such role at any time for any reason or no reason
whatsoever. Without limiting the foregoing, the parties hereto further acknowledge and agree that under the Notes
Documents, the Administrative Agent (i) is acting solely on behalf of the Noteholders (except to the limited extent
provided in Section 12.11), with duties that are entirely administrative in nature and do not (and are not intended
to) create any fiduciary obligations, notwithstanding the use of the defined term “the Administrative Agent”, the
terms “agent”, “administrative agent” and “collateral agent” and similar terms in any Notes Document to refer to
the Administrative Agent, which terms are used for title purposes only, (ii) is not assuming any obligation under
any Notes Document other than as expressly set forth therein or any role as agent, fiduciary or trustee of or for any
Noteholder or any other Secured Party and (iii) shall have no implied functions, responsibilities, duties,
obligations or other liabilities under any Notes Document (fiduciary or otherwise), and each
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Noteholder hereby waives and agrees not to assert any claim against the Administrative Agent based on the roles,
duties and legal relationships expressly disclaimed in this clause (c).
12.02 Binding Effect. Each Noteholder agrees that (i) any action taken by the Administrative Agent or the
Majority Noteholders (or, if expressly required hereby, a greater proportion of the Noteholders) in accordance
with the provisions of the Notes Documents, (ii) any action taken by the Administrative Agent in reliance upon
the instructions of the Majority Noteholders (or, where so required, such greater proportion) and (iii) the exercise
by the Administrative Agent or the Majority Noteholders (or, where so required, such greater proportion) of the
powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Secured Parties.
12.03 Use of Discretion.
(a)
No Action without Instructions. The Administrative Agent shall not be required to exercise any
discretion or take, or to omit to take, any action, including with respect to enforcement or collection, except
(subject to clause (b) below) any action it is required to take or omit to take (i) under any Notes Document or (ii)
pursuant to instructions from the Majority Noteholders (or, where expressly required by the terms of this
Agreement, a greater proportion of the Noteholders).
(b)
Right Not to Follow Certain Instructions. Notwithstanding Section 12.03(a) or any other term or
provision of this Section 12, the Administrative Agent shall not be required to take, or to omit to take, any action
(i) unless, upon demand, the Administrative Agent receives an indemnification satisfactory to it from the
Noteholders (or, to the extent applicable and acceptable to the Administrative Agent, any other Secured Party)
against all liabilities that, by reason of such action or omission, may be imposed on, incurred by or asserted
against the Administrative Agent or any Related Parties thereof or (ii) that is, in the opinion of the Administrative
Agent, in its sole and absolute discretion, contrary to any Notes Document, applicable Law or the best interests of
the Administrative Agent or any of its Affiliates or Related Parties.
12.04 Delegation of Rights and Duties. The Administrative Agent may, upon any term or condition it specifies,
delegate or exercise any of its rights, powers and remedies under, and delegate or perform any of its duties or any
other action with respect to, any Notes Document by or through any trustee, co-agent, employee, attorney-in-fact
and any other Person (including any Secured Party). Any such Person shall benefit from this Section 12 to the
extent provided by the Administrative Agent.
12.05 Reliance and Liability.
(a)
The Administrative Agent may, without incurring any liability hereunder, (i) consult with any of its
Related Parties and, whether or not selected by it, any other advisors, accountants and other experts (including
advisors to, and accountants and experts engaged by, any Obligor) and (ii) rely and act upon any document and
information and any telephone message or conversation, in each case believed by it to be genuine and transmitted,
signed or otherwise authenticated by the appropriate parties.
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(b)
Neither the Administrative Agent nor any of its Related Parties shall be liable for any action taken
or omitted to be taken by any of them under or in connection with any Notes Document, and each Noteholder and
the Issuer hereby waives and shall not assert (and the Issuer shall cause each other Obligor to waive and agree not
to assert) any right, claim or cause of action based thereon, except to the extent of liabilities resulting primarily
from the fraudulent conduct or behavior of the Administrative Agent or, as the case may be, such Related Party
(each as determined in a final, non-appealable judgment or order by a court of competent jurisdiction) in
connection with the duties expressly set forth herein. Without limiting the foregoing, the Administrative Agent:
(i)
shall not be responsible or otherwise incur liability for any action or omission taken in
reliance upon the instructions of the Majority Noteholders or for the actions or omissions of any of their Related
Parties selected with reasonable care (other than employees, officers and directors of the Administrative Agent,
when acting on behalf of the Administrative Agent);
(ii)
shall not be responsible to any Secured Party for the due execution, legality, validity,
enforceability, effectiveness, genuineness, sufficiency or value of, or the attachment, perfection or priority of any
Lien created or purported to be created under or in connection with, any Notes Document;
(iii) makes no warranty or representation, and shall not be responsible, to any Secured Party for
any statement, document, information, representation or warranty made or furnished by or on behalf of any
Related Party, in or in connection with any Notes Document or any transaction contemplated therein, whether or
not transmitted by the Administrative Agent, including as to completeness, accuracy, scope or adequacy thereof,
or for the scope, nature or results of any due diligence performed by the Administrative Agent in connection with
the Notes Documents; and
(iv)
shall not have any duty to ascertain or to inquire as to the performance or observance of any
provision of any Notes Document, whether any condition set forth in any Notes Document is satisfied or waived,
as to the financial condition of any Obligor or as to the existence or continuation or possible occurrence or
continuation of any Default or Event of Default and shall not be deemed to have notice or knowledge of such
occurrence or continuation unless it has received a notice from the Issuer, any Noteholder describing such Default
or Event of Default clearly labeled “notice of default” (in which case the Administrative Agent shall promptly
give notice of such receipt to all Noteholders);
and, for each of the items set forth in clauses (i) through (iv) above, each Noteholder and the Issuer hereby waives
and agrees not to assert (and the Issuer shall cause each other Obligor to waive and agree not to assert) any right,
claim or cause of action it might have against the Administrative Agent based thereon.
12.06 Administrative Agent Individually. The Administrative Agent and its Affiliates may make loans and
other extensions of credit to, acquire Equity Interests of, engage in any kind of business with, any Obligor or
Affiliate thereof as though it were not acting as the Administrative Agent and may receive separate fees and other
payments therefor. To the extent the Administrative
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Agent or any of its Affiliates subscribes for or purchases any Notes or otherwise becomes a Noteholder hereunder,
it shall have and may exercise the same rights and powers hereunder and shall be subject to the same obligations
and liabilities as any other Noteholder and the terms “Noteholder”, “Majority Noteholder”, and any similar terms
shall, except where otherwise expressly provided in any Notes Document, include, without limitation, the
Administrative Agent or such Affiliate, as the case may be, in its individual capacity as Noteholder or as one of
the Majority Noteholders, respectively.
12.07 Noteholder Credit Decision. Each Noteholder acknowledges that it has, independently and without
reliance upon the Administrative Agent, any Noteholder or any of their Related Parties or upon any document
solely or in part because such document was transmitted by the Administrative Agent or any of its Related Parties,
conducted its own independent investigation of the financial condition and affairs of each Obligor and has made
and continues to make its own credit decisions in connection with entering into, and taking or not taking any
action under, any Notes Document or with respect to any transaction contemplated in any Notes Document, in
each case based on such documents and information as it shall deem appropriate.
12.08 Expenses; Indemnities.
(a)
Each Noteholder agrees to reimburse the Administrative Agent and each of its Related Parties (to
the extent not reimbursed by any Obligor) promptly upon demand for such Noteholder’s Proportionate Share of
any costs and expenses (including fees, charges and disbursements of financial, legal and other advisors and Other
Taxes paid in the name of, or on behalf of, any Obligor) that may be incurred by the Administrative Agent or any
of its Related Parties in connection with the preparation, syndication, execution, delivery, administration,
modification, consent, waiver or enforcement (whether through negotiations, through any work-out, bankruptcy,
restructuring or other legal or other proceeding or otherwise) of, or legal advice in respect of its rights or
responsibilities under, any Notes Document.
(b)
Each Noteholder further agrees to indemnify the Administrative Agent and each of its Related
Parties (to the extent not reimbursed by any Obligor), from and against such Noteholder’s aggregate Proportionate
Share of the liabilities (including taxes, interests and penalties imposed for not properly withholding or backup
withholding on payments made to on or for the account of any Noteholder) that may be imposed on, incurred by
or asserted against the Administrative Agent or any of its Related Parties in any matter relating to or arising out
of, in connection with or as a result of any Notes Document or any other act, event or transaction related,
contemplated in or attendant to any such Notes Document, or, in each case, any action taken or omitted to be
taken by the Administrative Agent or any of its Related Parties under or with respect to any of the foregoing;
provided that no Noteholder shall be liable to the Administrative Agent or any of its Related Parties to the extent
such liability has resulted primarily from the gross negligence or willful misconduct of the Administrative Agent
or, as the case may be, such Related Party, as determined by a court of competent jurisdiction in a final non-
appealable judgment or order.
12.09 Resignation of the Administrative Agent.
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(a)
At any time upon not less than five (5) Business Days prior written notice, the Administrative
Agent may resign as the “the Administrative Agent” hereunder, in whole or in part (in the sole and absolute
discretion of the Administrative Agent), effective on the date set forth in such notice, which effective date shall
not be less than five (5) (or more than thirty (30)) days following delivery of such notice. If the Administrative
Agent delivers any such notice, the Majority Noteholders shall have the right to appoint a successor (which
successor shall not be a Disqualified Institution) to the Administrative Agent; provided that if a successor to the
Administrative Agent has not been appointed on or before the effectiveness of the resignation of the resigning
Administrative Agent, then the resigning Administrative Agent may, on behalf of the Noteholders, appoint any
Person reasonably chosen by it (other than a Disqualified Institution) as the successor to the Administrative
Agent.
(b)
Effective immediately upon its resignation, (i) the resigning Administrative Agent shall be
discharged from its duties and obligations under the Notes Documents to the extent set forth in the applicable
resignation notice, (ii) the Noteholders shall assume and perform all of the duties of the Administrative Agent
until a successor the Administrative Agent shall have accepted a valid appointment hereunder, (iii) the resigning
Administrative Agent and its Related Parties shall no longer have the benefit of any provision of any Notes
Document other than with respect to (x) any actions taken or omitted to be taken while such resigning
Administrative Agent was, or because the Administrative Agent had been, validly acting as the Administrative
Agent under the Notes Documents or (y) any continuing duties such resigning Administrative Agent continues to
perform, and (iv) subject to its rights under Section 12.04, the resigning Administrative Agent shall take such
action as may be reasonably necessary to assign to the successor the Administrative Agent its rights as the
Administrative Agent under the Notes Documents. Effective immediately upon its acceptance of a valid
appointment as the Administrative Agent, a successor the Administrative Agent shall succeed to, and become
vested with, all the rights, powers, privileges and duties of the resigning Administrative Agent under the Notes
Documents.
12.10 Release of Collateral or Guarantees. Each Noteholder hereby consents to the release and hereby directs
the Administrative Agent to release (or, in the case of Section 12.10(b)(ii), release or subordinate) the following:
(a)
any Subsidiary of the Issuer from its guaranty of any Obligation of any Obligor if all of the Equity
Interests in such Subsidiary owned by any Obligor or any of its Subsidiaries are disposed of in an Asset Sale
permitted under the Notes Documents (including pursuant to a waiver or consent), to the extent that, after giving
effect to such Asset Sale, such Subsidiary would not be required to guaranty any Obligations pursuant to Section
8.12(a); and
(b)
any Lien held by the Administrative Agent for the benefit of the Secured Parties against (i) any
Collateral that is disposed of by an Obligor or any of its Subsidiaries in an Asset Sale permitted by the Notes
Documents (including pursuant to a valid waiver or consent), (ii) any property subject to a Lien described in
Section 9.02(c) and (iii) all of the Collateral and all Obligors, upon (w) termination of the Commitments, (x)
payment and satisfaction in full of the Notes and all other Obligations (other than (i) for the Warrant Obligations
and (y) contingent obligations as to which no Claims have been asserted) that the Administrative Agent has been
notified in writing are then due and payable, (y) deposit of cash collateral with respect to all contingent
Obligations, in amounts and on terms and conditions and with parties satisfactory to
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the Administrative Agent and each Indemnified Party that is owed such Obligations and (z) to the extent requested
by the Administrative Agent, receipt by the Secured Parties of liability releases from the Obligors each in form
and substance acceptable to the Administrative Agent.
Each Noteholder hereby directs the Administrative Agent, and the Administrative Agent hereby agrees, upon
receipt of reasonable advance notice from the Issuer, to execute and deliver or file such documents and to perform
other actions reasonably necessary to release the guarantees and Liens when and as directed in this Section 12.10.
12.11 Additional Secured Parties. The benefit of the provisions of the Notes Documents directly relating to the
Collateral or any Lien granted thereunder shall extend to and be available to any Secured Party that is not a
Noteholder so long as, by accepting such benefits, such Secured Party agrees, as among the Administrative Agent
and all other Secured Parties, that such Secured Party is bound by (and, if requested by the Administrative Agent,
shall confirm such agreement in a writing in form and substance acceptable to the Administrative Agent) this
Section 12 and the decisions and actions of the Administrative Agent and the Majority Noteholders (or, where
expressly required by the terms of this Agreement, a greater proportion of the Noteholders) to the same extent a
Noteholder is bound; provided that, notwithstanding the foregoing, (i) such Secured Party shall be bound by
Section 12.08 only to the extent of liabilities, costs and expenses with respect to or otherwise relating to the
Collateral held for the benefit of such Secured Party, in which case the obligations of such Secured Party
thereunder shall not be limited by any concept of Proportionate Share or similar concept, (ii) each of the
Administrative Agent and each Noteholder shall be entitled to act at its sole discretion, without regard to the
interest of such Secured Party, regardless of whether any Obligation to such Secured Party thereafter remains
outstanding, is deprived of the benefit of the Collateral, becomes unsecured or is otherwise affected or put in
jeopardy thereby, and without any duty or liability to such Secured Party or any such Obligation and (iii) such
Secured Party shall not have any right to be notified of, consent to, direct, require or be heard with respect to, any
action taken or omitted in respect of the Collateral or under any Notes Document.
SECTION 13
GUARANTEE
13.01 The Guarantee. The Subsidiary Guarantors hereby jointly and severally guarantee to the Administrative
Agent and the Noteholders, and their successors and assigns, the prompt payment in full when due (whether at
stated maturity, by acceleration or otherwise) of the principal of and interest on the Notes, all fees and other
amounts and Obligations from time to time owing to the Administrative Agent and the Noteholders by the Issuer
and each other Obligor under this Agreement or under any other Notes Document (other than in the case of the
Irish Subsidiary Guarantor, the Warrant Certificate), in each case strictly in accordance with the terms hereof and
thereof (such obligations being herein collectively called the “Guaranteed Obligations”). The Subsidiary
Guarantors hereby further jointly and severally agree that if the Issuer or any other Obligor shall fail to pay in full
when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the
Subsidiary Guarantors shall promptly pay the same, without any demand or notice whatsoever, and that in the case
of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same shall be promptly
paid in full when due
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(whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or
renewal.
13.02 Obligations Unconditional. The obligations of the Subsidiary Guarantors under Section 13.01 are
absolute and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Issuer or any other Subsidiary Guarantor under this Agreement or any
other agreement or instrument referred to herein, or any substitution, release or exchange of any other guarantee
of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by all applicable Laws,
irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, it being the intent of this Section 13.02 that the obligations of the Subsidiary
Guarantors hereunder shall be absolute and unconditional, joint and several, under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the
following shall not alter or impair the liability of the Subsidiary Guarantors hereunder, which shall remain
absolute and unconditional as described above:
(a)
at any time or from time to time, without notice to the Subsidiary Guarantors, the time for any
performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or
compliance shall be waived;
(b)
any of the acts mentioned in any of the provisions of this Agreement or any other agreement or
instrument referred to herein shall be done or omitted;
(c)
the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed
Obligations shall be modified, supplemented or amended in any respect, or any right under this Agreement or any
other agreement or instrument referred to herein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; or
(d)
any lien or security interest granted to, or in favor of, the Secured Parties as security for any of the
Guaranteed Obligations shall fail to be perfected.
The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand of payment, protest
and all notices whatsoever, and any requirement that the Administrative Agent or any Noteholder exhaust any
right, power or remedy or proceed against the Issuer or any other Subsidiary Guarantor under this Agreement or
any other agreement or instrument referred to herein, or against any other Person under any other guarantee of, or
security for, any of the Guaranteed Obligations.
13.03 Reinstatement. The obligations of the Subsidiary Guarantors under this Section 13 shall be automatically
reinstated if and to the extent that for any reason any payment by or on behalf of the Issuer in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and the
Subsidiary Guarantors jointly and severally agree that they shall indemnify the Secured Parties on demand for all
reasonable costs and expenses (including reasonable and documented fees of counsel) properly incurred by such
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Persons in connection with such rescission or restoration, including any such costs and expenses properly incurred
in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar
payment under any bankruptcy, insolvency or similar law.
13.04 Subrogation. The Subsidiary Guarantors hereby jointly and severally agree that, until the payment and
satisfaction in full in cash of all Guaranteed Obligations (other than contingent obligations for which no Claim has
been asserted) and the expiration and termination of the Commitments, they shall not exercise any right or remedy
arising by reason of any performance by them of their guarantee in Section 13.01, whether by subrogation or
otherwise, against the Issuer or any other guarantor of any of the Guaranteed Obligations or any security for any
of the Guaranteed Obligations.
13.05 Remedies. The Subsidiary Guarantors jointly and severally agree that, as between the Subsidiary
Guarantors, on one hand, and the Administrative Agent and the Noteholders, on the other hand, the obligations of
the Issuer under this Agreement and under the other Notes Documents may be declared to be forthwith due and
payable as provided in Section 11 (and shall be deemed to have become automatically due and payable in the
circumstances provided in Section 11) for purposes of Section 13.01 notwithstanding any stay, injunction or other
prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as
against the Issuer and that, in the event of such declaration (or such obligations being deemed to have become
automatically due and payable), such obligations (whether or not due and payable by the Issuer) shall forthwith
become due and payable by the Subsidiary Guarantors for purposes of Section 13.01.
13.06 Instrument for the Payment of Money. Each Subsidiary Guarantor hereby acknowledges that the
guarantee in this Section 13 constitutes an instrument for the payment of money, and consents and agrees that the
Administrative Agent and the Noteholders, at their sole option, in the event of a dispute by such Subsidiary
Guarantor in the payment of any moneys due hereunder, shall have the right to proceed by motion for summary
judgment in lieu of complaint pursuant to N.Y. Civ. Prac. L&R § 3213.
13.07 Continuing Guarantee. The guarantee in this Section 13 is a continuing guarantee, and shall apply to all
Guaranteed Obligations whenever arising.
(a)
13.08 General Limitation on Guarantee Obligations.
In any action or proceeding involving any
provincial, territorial or state corporate Law, or any state or federal bankruptcy, insolvency, reorganization or other
Law affecting the rights of creditors generally, if the obligations of any Subsidiary Guarantor under Section 13.01
would otherwise be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any
other creditors, on account of the amount of its liability under Section 13.01, then, notwithstanding any other
provision hereof to the contrary, the amount of such liability shall, without any further action by such Subsidiary
Guarantor, the Administrative Agent, any Noteholder or any other Person, be automatically limited and reduced to
the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as
determined in such action or proceeding; and (b) notwithstanding anything to the contrary in this Agreement, the
obligations, liabilities and undertakings under this Agreement (including in the guarantee in this section 13) shall
not be
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deemed to be undertaken or incurred by an Irish Subsidiary Guarantor to the extent that the same would constitute
unlawful financial assistance prohibited by Section 82 of the Irish Companies Act (or any analogous provision of
any other applicable Law).
SECTION 14
MISCELLANEOUS
14.01 No Waiver. No failure on the part of the Administrative Agent or the Noteholders to exercise and no delay
in exercising, and no course of dealing with respect to, any right, power or privilege under any Notes Document
shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any
Notes Document preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by Law.
14.02 Notices. All notices, requests, instructions, directions and other communications provided for herein
(including any modifications of, or waivers, requests or consents under, this Agreement) or in the other Notes
Documents shall be given or made in writing (including by telecopy or email) delivered, if to the Issuer, another
Obligor, the Administrative Agent or any Noteholder, to its address specified on the signature pages hereto or its
Guarantee Assumption Agreement, as the case may be, or at such other address as shall be designated by such
party in a written notice to the other parties. Except as otherwise provided in this Agreement or therein, all such
communications shall be deemed to have been duly given upon receipt of a legible copy thereof, in each case
given or addressed as aforesaid. All such communications provided for herein by telecopy shall be confirmed in
writing promptly after the delivery of such communication (it being understood that non-receipt of written
confirmation of such communication shall not invalidate such communication). Notwithstanding anything to the
contrary in this Agreement or any other Notes Document, notices, documents, certificates and other deliverables
to the Noteholders by any Obligor may be made solely to the Administrative Agent and the Administrative Agent
shall promptly deliver such notices, documents, certificates and other deliverables to the Noteholders.
14.03 Expenses, Indemnification, Etc.
(a)
Expenses. Issuer agrees to pay or reimburse (i) the Administrative Agent and the Noteholders for
all of their reasonable and documented out of pocket costs and expenses (including the reasonable and
documented fees and expenses of Morrison & Foerster LLP, counsel to the Administrative Agent, and printing,
reproduction, document delivery, communication and travel costs) in connection with (x) the negotiation,
preparation, execution and delivery of this Agreement and the other Notes Documents and the issuing of the Notes
(exclusive of post-closing costs), (y) post-closing costs and expenses (including in connection with the listing of
the Notes on a Recognised Stock Exchange in accordance with Section 8.20), any amendments, consents, waivers
or other modifications, if any) and (z) the negotiation or preparation of any modification, supplement or waiver of
any of the terms of this Agreement or any of the other Notes Documents (whether or not consummated) and
(ii) the Administrative Agent and the Noteholders for all of their reasonable and documented out of pocket costs
and expenses (including the reasonable and documented out of pocket fees and expenses of legal counsel) in
connection with any enforcement or collection proceedings resulting from the occurrence of an Event of Default.
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(b)
Exculpation, Indemnification, etc.
(i)
In no event shall any party hereto, any successor, transferee or assignee of any party hereto,
or any of their respective Affiliates, directors, officers, employees, attorneys, agents, advisors or controlling
parties (each, an “Exculpated Party”) have any obligation or responsibility for (and the Obligors and the Secured
Parties, as applicable, jointly and severally waive any claims they may have in respect of) any Loss, on any theory
of liability, for consequential, indirect, special or punitive damages arising out of or otherwise relating to this
Agreement or any of the other Notes Document or any of the Transactions or the actual or proposed use of the
proceeds of the Notes; provided that, nothing in this clause (i) shall relieve any Obligor of any obligation such
Obligor may have to indemnify an Indemnified Party, as provided in clause (ii) below, against any special,
indirect, consequential or punitive damages asserted against such Indemnified Party by a third party. Each party
hereto agrees, to the fullest extent permitted by applicable Law, that it will not assert, directly or indirectly, any
Claim against any Exculpated Party with respect to any of the foregoing.
(c)
Each Obligor, jointly and severally, hereby indemnifies the Administrative Agent, each Noteholder,
each of their respective permitted successors, transferees and assigns and each of their respective Affiliates,
directors, officers, employees, attorneys, agents, advisors and controlling parties (each, an “Indemnified Party”)
from and against, and agrees to hold them harmless against, any and all Claims and Losses of any kind (including
reasonable fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection with or relating to any investigation,
litigation or proceeding (each, a “Proceeding”) or the preparation of any defense with respect thereto arising out
of or in connection with or relating to this Agreement or any of the other Notes Documents or the Transactions or
any use made or proposed to be made with the proceeds of the Notes, whether or not such Proceeding is brought
by any Obligor, any of its Subsidiaries, any of its shareholders or creditors, an Indemnified Party or any other
Person, or an Indemnified Party is otherwise a party thereto, and whether or not any of the conditions precedent
set forth in Section 6 are satisfied or the other transactions contemplated by this Agreement are consummated,
except to the extent such Claim or Loss is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. No Obligor
shall assert any Claim against any Indemnified Party, on any theory of liability, for consequential, indirect, special
or punitive damages arising out of or otherwise relating to this Agreement or any of the other Notes Documents or
any of the Transactions or the actual or proposed use of the proceeds of the Notes. This Section 14.03(b) shall not
apply with respect to Taxes other than any Taxes that represent Losses arising from any non-Tax Claim.
14.04 Amendments, Etc. Except as otherwise expressly provided in this Agreement, any provision of this
Agreement and any other Notes Document may be modified or supplemented only by an instrument in writing
signed by the Issuer, the Administrative Agent and the Majority Noteholders; provided that:
(a)
any such modification or supplement that is disproportionately adverse to any Noteholder as
compared to other Noteholders or subjects any Noteholder to any additional obligation shall not be effective
without the consent of such affected Noteholder;
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(b)
the consent of all of the Noteholders shall be required to:
(i)
amend, modify, discharge, terminate or waive any of the terms of this Agreement or any
other Notes Document if such amendment, modification, discharge, termination or waiver would increase the
amount of the Notes or any Commitment;
(ii)
postpone or delay any date fixed for, or reduce or waive, any scheduled installment of
principal or any payment of interest, fees or other amounts (other than principal) due to the Noteholders;
(iii)
reduce the principal of, or the rate of interest specified herein (it being agreed that waiver of
the default interest shall only require the consent of Majority Noteholders) or the amount of interest payable in
cash specified herein in respect of any Note, or of any fees or other amounts payable hereunder or under any other
Notes Document;
(iv)
to subscribe for Notes in Section 6;
amend or waive compliance with the conditions precedent to the obligations of Noteholders
(v)
amend, modify, discharge, terminate or waive any Security Document if the effect is to
discharge the Issuer or any Subsidiary from their respective Obligations, or release a material part of the
Collateral, in each case other than pursuant to the terms of hereof and thereof; or
(vi)
amend this Section 14.04 or the definition of “Majority Noteholders”.
(c)
if the Administrative Agent and the Issuer shall have jointly identified an obvious error or any error
or omission of a technical nature, in each case, in any provision of the Notes Documents, then the Administrative
Agent and the Issuer shall be permitted to amend such provision, and, in each case, such amendment shall become
effective without any further action or consent of any other party to any Notes Document if the same is not
objected to in writing by the Majority Noteholders to the Administrative Agent within ten (10) Business Days
following receipt of notice thereof.
14.05 Successors and Assigns.
(a)
General. The provisions of this Agreement and the other Notes Documents shall be binding upon
and shall inure to the benefit of the parties hereto or thereto and their respective successors and assigns permitted
hereby or thereby, except that no Obligor may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Administrative Agent. Any Noteholder may assign or otherwise
transfer any of its rights or obligations hereunder or under any of the other Notes Documents (i) to an assignee in
accordance with the provisions of Section 14.05(b), (ii) by way of participation in accordance with the provisions
of Section 14.05(e), or (iii) by way of pledge or assignment of a security interest subject to the restrictions of
Section 14.05(h). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent
provided in Section 14.05(f) and, to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Noteholders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
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(b)
Assignments by Noteholder. Any Noteholder may at any time transfer or assign to one or more
Eligible Transferees (or, if an Event of Default has occurred and is continuing, to any Person) all or a portion of its
rights and obligations under this Agreement (including all or a portion of the Notes at the time owing to it) and the
other Notes Documents; provided that (i) no such assignment shall be made to any Obligor, any Affiliate of any
Obligor, or any employees or directors of any Obligor at any time, (ii) no such assignment shall be made without
the prior written consent of the Administrative Agent, and (iii) so long as no Event of Default shall have occurred
and is continuing, no such assignment shall be made without the prior written consent of the Issuer (such consents
not to be unreasonably withheld, delayed or conditioned) to a Disqualified Institution; provided that the Issuer
shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the
Administrative Agent within five (5) Business Days after having received notice thereof. Subject to the recording
thereof by the Noteholder pursuant to Section 14.05(d), from and after the effective date specified in each
Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and obligations of such Noteholder under
this Agreement and the other Notes Document, and correspondingly the assigning Noteholder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of a transfer or assignment covering all of the Noteholder’s rights and obligations
under this Agreement, such Noteholder shall cease to be a party hereto) and the other Notes Documents but shall
continue to be entitled to the benefits of Section 5 and Section 14.03. Any assignment or transfer by the
Noteholder of rights or obligations under this Agreement that does not comply with this Section 14.05(b) shall be
treated for purposes of this Agreement as a sale by such Noteholder of a participation in such rights and
obligations in accordance with Section 14.05(e).
(c)
Amendments to Notes Document. Each of the Administrative Agent, the Noteholders, the Issuer
and its Subsidiaries agrees to enter into such amendments to the Notes Documents, and such additional Security
Documents and other instruments and agreements, in each case in form and substance reasonably acceptable to
the Administrative Agent, the Noteholders the Issuer and its Subsidiaries, as shall reasonably be necessary to
implement and give effect to any assignment made under this Section 14.05.
(d)
Notes Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent
of the Issuer, shall maintain at one of its offices in the United States a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of the Noteholders, and the
Commitments of, and principal amounts (and stated interest) of the Notes owing to, each Noteholder pursuant to
the terms hereof from time to time (the “Notes Register”). The entries in the Register shall be conclusive absent
manifest error, and the Issuer, the Administrative Agent and the Noteholders shall treat each Person whose name
is recorded in the Register pursuant to the terms hereof as a Noteholder hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Issuer and any Noteholder, at any reasonable
time and from time to time upon reasonable prior notice.
(e)
Participations. Any Noteholder may at any time, without the consent of, or notice to, the Issuer,
sell participations to any Person (other than a Disqualified Institution (so long as no Event of Default shall have
occurred and is continuing), natural person or any Obligor or any of its Subsidiaries or Affiliates) (each, a
“Participant”) in all or a portion of the Noteholder’s rights
108
and/or obligations under this Agreement (including all or a portion of the Commitment and/or the Notes owing to
it); provided that (i) such Noteholder’s obligations under this Agreement shall remain unchanged, (ii) such
Noteholder shall remain solely responsible to the other parties hereto for the performance of such obligations and
(iii) the Issuer shall continue to deal solely and directly with such Noteholder in connection therewith. Any
agreement or instrument pursuant to which any Noteholder sells such a participation shall provide that such
Noteholder shall retain the sole right to enforce the Notes Documents and to approve any amendment,
modification or waiver of any provision of the Notes Documents; provided that such agreement or instrument may
provide that such Noteholder shall not, without the consent of the Participant, agree to any amendment,
modification or waiver that would (i) increase or extend the term of such Noteholder’s Commitment, (ii) extend
the date fixed for the payment of principal of or interest on the Notes or any portion of any fee hereunder payable
to the Participant, (iii) reduce the amount of any such payment of principal, or (iv) reduce the rate at which
interest is payable thereon to a level below the rate at which the Participant is entitled to receive such interest.
Subject to Section 14.05(f), the Issuer agrees that each Participant shall be entitled to the benefits of Section 5
(subject to the requirements and limitations therein including the requirements under Section 5.03(f) (it being
understood that the documentation required under Section 5.03(f) shall be delivered to the participating
Noteholder)) to the same extent as if it were a Noteholder and had acquired its interest by assignment pursuant to
Section 14.05(b); provided that such Participant agrees to be subject to the provisions of Section 5.03(h) as if it
were an assignee under Section 14.05(b) above. To the extent permitted by applicable Law, each Participant also
shall be entitled to the benefits of Section 4.03(a) as though it were a Noteholder.
(f)
Limitations on Rights of Participants. A Participant shall not be entitled to receive any greater
payment under Sections 5.01 or 5.03 than such Noteholder would have been entitled to receive with respect to the
participation sold to such Participant, except to the extent such entitlement to receive a greater payment results
from a Change in Law that occurs after the Participant acquired the applicable participation.
(g)
Participant Register. Each Noteholder that sells a participation shall, acting solely for this
purpose as a non-fiduciary agent of the Issuer, maintain a register on which it enters the name and address of each
Participant and the principal amounts (and stated interest) of each Participant’s interest in the Notes or other
Obligations under the Notes Documents (the “Participant Register”); provided that no Noteholder shall have any
obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in any Commitments, Notes, or its other Obligations under any
Notes Document) to any Person except to the extent that such disclosure is necessary to establish that such
Commitment, Note, or other Obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such
Noteholder shall treat each Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of
doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for
maintaining a Participant Register.
(h)
Certain Pledges. Any Noteholder may at any time pledge or assign a security interest in all or any
portion of its rights under the Notes Documents to secure obligations of such
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Noteholder, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Noteholder from any of its obligations hereunder or substitute any
such pledgee or assignee for such Noteholder as a party hereto.
14.06 Survival. The obligations of the Issuer under Sections 5.01, 5.02, 5.03, 14.03, 14.05, 14.06, 14.09, 14.10,
14.11, 14.12, 14.13, 14.14 and the obligations of the Subsidiary Guarantors under Section 13 (solely to the extent
guaranteeing any of the obligations under the foregoing Sections) shall survive the repayment of the Obligations
and the termination of the Commitment and, in the case of the Noteholders’ assignment of any interest in the
Commitment or the Notes hereunder, shall survive, in the case of any event or circumstance that occurred prior to
the effective date of such assignment, the making of such assignment, notwithstanding that the Noteholders may
cease to be “Noteholders” hereunder. In addition, each representation and warranty made, or deemed to be made
by a Notes Subscription Request, herein or pursuant hereto shall survive the making of such representation and
warranty.
14.07 Captions. The table of contents and captions and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.
14.08 Counterparts; Electronic Signatures. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute
this Agreement by signing any such counterpart. Delivery of an executed signature page of this Agreement by
facsimile transmission or electronic transmission (in PDF format) shall be effective as delivery of a manually
executed counterpart hereof. Any signature (including, without limitation, (x) any electronic symbol or process
attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign,
authenticate or accept such contract or record and (y) any facsimile or .pdf signature) hereto or to any other
certificate, agreement or document related to this Agreement, and any contract formation or record-keeping, in
each case, through electronic means, shall have the same legal validity and enforceability as a manually executed
signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable Law,
including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any similar state law based on the Uniform Electronic Transactions Act, and the
parties hereto hereby waive any objection to the contrary. Each party hereby consents to the execution of this
Agreement by way of electronic signature.
14.09 Governing Law. This Agreement and the rights and obligations of the parties hereunder shall be governed
by, and construed in accordance with, the law of the State of New York, without regard to principles of conflicts
of laws that would result in the application of the laws of any other jurisdiction; provided that Section 5-1401 of
the New York General Obligations Law shall apply.
14.10 Jurisdiction, Service of Process and Venue.
(a)
Submission to Jurisdiction. Each Obligor agrees that any suit, action or proceeding with respect
to this Agreement or any other Notes Document to which it is a party or any judgment entered by any court in
respect thereof may be brought initially in the federal or state
110
courts in New York, New York and irrevocably submits to the non-exclusive jurisdiction of each such court for the
purpose of any such suit, action, proceeding or judgment. This Section 14.10(a) is for the benefit of the
Administrative Agent and the Noteholders only and, as a result, no Noteholder shall be prevented from taking
proceedings in any other courts with jurisdiction. To the extent allowed by any applicable Law, the Noteholders
may take concurrent proceedings in any number of jurisdictions.
(b)
Alternative Process. Nothing herein shall in any way be deemed to limit the ability of the
Administrative Agent and the Noteholders to serve any process or summons in any manner permitted by any
applicable Law.
(c) Waiver of Venue, Etc. Each Obligor irrevocably waives to the fullest extent permitted by law any
objection that it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out
of or relating to this Agreement or any other Notes Document and hereby further irrevocably waives to the fullest
extent permitted by law any claim that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. A final judgment (in respect of which time for all appeals has elapsed) in any
such suit, action or proceeding shall be conclusive and may be enforced in any court to the jurisdiction of which
the Issuer is or may be subject, by suit upon judgment.
14.11 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER NOTES DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
14.12 Waiver of Immunity. To the extent that any Obligor may be or become entitled to claim for itself or its
property or revenues any immunity on the ground of sovereignty or the like from suit, court jurisdiction,
attachment prior to judgment, attachment in aid of execution of a judgment or execution of a judgment, and to the
extent that in any such jurisdiction there may be attributed such an immunity (whether or not claimed), such
Obligor hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity with respect to its
obligations under this Agreement and the other Notes Documents.
14.13 Entire Agreement. This Agreement and the other Notes Documents constitute the entire agreement
among the parties with respect to the subject matter hereof and thereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter hereof, including (a) any
confidentiality (or similar) agreements and (b) the Proposal Letter. EACH OBLIGOR ACKNOWLEDGES,
REPRESENTS AND WARRANTS THAT IN DECIDING TO ENTER INTO THIS AGREEMENT AND THE
OTHER NOTES DOCUMENTS OR IN TAKING OR NOT TAKING ANY ACTION HEREUNDER OR
THEREUNDER,
IT HAS NOT RELIED, AND SHALL NOT RELY, ON ANY STATEMENT,
REPRESENTATION, WARRANTY, COVENANT, AGREEMENT OR UNDERSTANDING, WHETHER
WRITTEN OR ORAL, OF OR WITH ADMINISTRATIVE AGENT OR THE NOTEHOLDERS OTHER THAN
THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE OTHER NOTES DOCUMENTS.
111
14.14 Severability. If any provision hereof is found by a court to be invalid or unenforceable, to the fullest
extent permitted by any applicable Law the parties agree that such invalidity or unenforceability shall not impair
the validity or enforceability of any other provision hereof.
14.15 No Fiduciary Relationship. The Issuer acknowledges that the Administrative Agent and the Noteholders
have no fiduciary relationship with, or fiduciary duty to, the Issuer arising out of or in connection with this
Agreement or the other Notes Documents, and the relationship between the Noteholders and the Issuer is solely
that of creditor and debtor. This Agreement and the other Notes Documents do not create a joint venture among
the parties.
14.16 Confidentiality. The Administrative Agent and each Noteholder agree to keep confidential all non-public
and other confidential information provided to them in writing by any Obligor pursuant to this Agreement that is
designated by such Obligor as confidential in accordance with its customary procedures for handling its own
confidential information; provided that nothing herein shall prevent the Administrative Agent or any Noteholder
from disclosing any such information (i) subject to an agreement to comply with the provisions of this Section, to
the Administrative Agent, any other Noteholder, any Affiliate of a Noteholder or any Eligible Transferee or other
assignee permitted under Section 14.05(b), (ii) subject to an agreement to comply with the provisions of this
Section, to any actual or prospective direct or indirect counterparty to any Hedging Agreement (or any
professional advisor to such counterparty), (iii) to its employees, officers, directors, agents, attorneys, accountants,
trustees and other professional advisors or those of any of its affiliates (collectively, its “Related Parties”);
provided that such Related Parties are subject to obligations of confidentiality at least as restrictive as set forth in
this Section 14.16, and the applicable Noteholder shall remain liable hereunder for any breach of this Section
14.16 by any of its Related Parties, (iv) upon the request or demand of any Governmental Authority or any
Governmental Authority having jurisdiction over such Person or its Related Parties (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (v) in response to any order of any court
or other Governmental Authority or as may otherwise be required pursuant to any applicable Law, (vi) if
requested or required to do so in connection with any litigation or similar proceeding; provided that, unless
otherwise prohibited by applicable Law, court order or decree, the Administrative Agent and each Noteholder, as
applicable, shall provide prior notice to the Obligor to allow such Obligor an opportunity to obtain a protective
order, (vii) that has been publicly disclosed (other than as a result of a disclosure in violation of this Section
14.16), (viii) to the National Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a Noteholder’s investment portfolio
in connection with ratings issued with respect to such Noteholder, (ix) in connection with the exercise of any
remedy permitted hereunder or under any other Notes Document, (x) on a confidential basis to (A) any rating
agency in connection with rating the Issuer or any of its Subsidiaries or the Notes or (B) the CUSIP Service
Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers of other market
identifiers with respect to the Notes or (xi) to any other party hereto.
14.17 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate
applicable to any Notes, together with all fees, charges and other amounts that are treated as interest on such Notes
under applicable Law (collectively, “charges”), shall exceed the maximum lawful rate (the “Maximum Rate”)
that may be contracted for, charged, taken, received or reserved by the Administrative Agent and the Noteholder
holding such Notes in accordance
112
with applicable Law, the rate of interest payable in respect of such Notes hereunder, together with all charges
payable in respect thereof, shall be limited to the Maximum Rate. To the extent lawful, the interest and charges
that would have been paid in respect of such Notes but were not paid as a result of the operation of this Section
shall be cumulated and the interest and charges payable to such Noteholder in respect of other Notes or periods
shall be increased (but not above the amount collectible at the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate for each day to the date of repayment,
shall have been received by such Noteholder. Any amount collected by such Noteholder that exceeds the
maximum amount collectible at the Maximum Rate shall be applied to the reduction of the principal balance of
such Notes so that at no time shall the interest and charges paid or payable in respect of such Notes exceed the
maximum amount collectible at the Maximum Rate.
14.18 Early Redemption Fee. The parties hereto acknowledge and agree that, to the extent the Early
Redemption Fee is applicable to any repurchase, repayment or redemption of principal of any Notes at any time,
such Early Redemption Fee is not intended to be a penalty assessed as a result of any such repurchase, repayment
or redemption of the Notes, but rather is the product of a good faith, arm’s length commercial negotiation between
the Issuer and the Noteholders relating to the mutually satisfactory compensation payable to the Noteholders by
the Issuer in respect of the Notes made hereunder. In furtherance of the foregoing, to the fullest extent permitted
by applicable Law, the Obligors hereby jointly and severally waive any rights or Claims any of them may have
under any such applicable Law (whether or not in effect on the Closing Date) that would prohibit or restrict the
payment of the Early Redemption Fee under any of the circumstances provided herein or in any other Notes
Document, including payment after acceleration of the Notes.
14.19 Judgment Currency.
(a)
If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due
hereunder in Dollars into another currency, the parties hereto agree, to the fullest extent permitted by Law, that the
rate of exchange used shall be that at which, in accordance with normal banking procedures, the Administrative
Agent could purchase Dollars with such other currency at the buying spot rate of exchange in the New York
foreign exchange market on the Business Day immediately preceding that on which any such judgment, or any
relevant part thereof, is given.
(b)
The obligations of the Obligors in respect of any sum due to the Administrative Agent hereunder
and under the other Notes Documents shall, notwithstanding any judgment in a currency other than Dollars, be
discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum
adjudged to be so due in such other currency the Administrative Agent may, in accordance with normal banking
procedures, purchase Dollars with such other currency. If the amount of Dollars so purchased is less than the sum
originally due to the Administrative Agent in Dollars, the Issuer agrees, to the fullest extent that it may effectively
do so, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent
against such loss. If the amount of Dollars so purchased exceeds the sum originally due to the Administrative
Agent in Dollars, the Administrative Agent shall remit such excess to the Issuer.
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14.20 USA PATRIOT Act. The Administrative Agent and the Noteholders hereby notify the Obligors that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”), they are required to obtain, verify and record information that identifies the Obligors,
which information includes the name and address of each Obligor and other information that will allow such
Person to identify such Obligor in accordance with the Patriot Act.
14.21 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding
anything to the contrary in any Notes Document or in any other agreement, arrangement or understanding among
any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising
under any Notes Document, to the extent such liability is unsecured, may be subject to the Write-Down and
Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and
agrees to be bound by:
(a)
the application of any Write-Down and Conversion Powers by the applicable Resolution Authority
to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial
Institution; and
(b)
the effects of any Bail-In Action on any such liability, including, if applicable:
(i)
a reduction in full or in part or cancellation of any such liability;
(ii)
a conversion of all, or a portion of, such liability into shares or other instruments of
ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued
to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in
lieu of any rights with respect to any such liability under this Agreement or any other Notes Document; or
(iii)
the variation of the terms of such liability in connection with the exercise of the Write-
Down and Conversion Powers of the applicable Resolution Authority.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as of the day and year first above written.
ISSUER:
MEIRAGTX HOLDINGS PLC
By /s/ Richard Giroux
Name: Richard Giroux
Title: Chief Financial Officer and Chief Operating
Officer
Address for Notices:
[***]
SUBSIDIARY GUARANTORS:
MEIRAGTX UK II LIMITED
By /s/ Richard Giroux
Name: Richard Giroux
Title: Chief Financial Officer and Chief Operating
Officer
Address for Notices:
[***]
[Signature Page to Amended and Restated Notes Purchase Agreement And Guaranty]
MEIRAGTX IRELAND DAC
By /s/ Richard Giroux
Name: Richard Giroux
Title: Chief Financial Officer and Chief Operating
Officer
Address for Notices:
[***]
[Signature Page to Amended and Restated Notes Purchase Agreement And Guaranty]
ADMINISTRATIVE AGENT:
PERCEPTIVE CREDIT HOLDINGS III, LP
By: PERCEPTIVE CREDIT OPPORTUNITIES GP,
LLC, its general partner
By /s/ Sandeep Dixit
Name: Sandeep Dixit
Title: Chief Credit Officer
By /s/ Sam Chawla
Name: Sam Chawla
Title: Portfolio Manager
Address for Notices:
[***]
[Signature Page to Amended and Restated Notes Purchase Agreement And Guaranty]
NOTEHOLDERS:
PERCEPTIVE CREDIT HOLDINGS III, LP
By: PERCEPTIVE CREDIT OPPORTUNITIES GP,
LLC, its general partner
By /s/ Sandeep Dixit
Name: Sandeep Dixit
Title: Chief Credit Officer
By /s/ Sam Chawla
Name: Sam Chawla
Title: Portfolio Manager
Address for Notices:
[***]
[Signature Page to Amended and Restated Notes Purchase Agreement And Guaranty]
NOTE
Exhibit 10.38
December 19, 2022
U.S. $75,000,000
FOR VALUE RECEIVED, the undersigned, MeiraGTx Holdings plc, an exempted company incorporated
under the laws of the Cayman Islands with registration number 336306 (the “Issuer”), hereby promises to pay to
Perceptive Credit Holdings III, LP (the “Noteholder”), in immediately available funds, the aggregate principal
sum set forth above, or, if less, the aggregate unpaid principal amount of the Tranche 1 Note made by the
Noteholder pursuant to Section 2.01(a) of the Amended and Restated Note Purchase Agreement and Guaranty,
dated as of December 19, 2022 (as amended or otherwise modified from time to time, the “Note Purchase
Agreement”), among the Issuer, the Subsidiary Guarantors from time to time thereunder, the noteholders from
time to time party thereto (the “Noteholders”) and Perceptive Credit Holdings III, LP, a Delaware limited
partnership, as administrative agent for the Noteholders (in such capacity, together with its successors and assigns,
the “Administrative Agent”), on the date or dates specified in the Note Purchase Agreement, together with interest
on the principal amount of such Notes from time to time outstanding thereunder at the rates, and payable in the
manner and on the dates, specified in the Note Purchase Agreement.
This Note is a Note issued pursuant to the terms of the Note Purchase Agreement, and this Note and the
holder hereof are entitled to all the benefits and security provided for thereby or referred to therein, to which Note
Purchase Agreement reference is hereby made for a statement thereof. All defined terms used in this Note, except
terms otherwise defined herein, shall have the same meaning as in the Note Purchase Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD RESULT IN THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION; PROVIDED THAT SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY.
The Issuer hereby waives demand, presentment, protest or notice of any kind hereunder, other than notices
provided for in the Note Documents. The non-exercise by the holder hereof of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in such particular or any subsequent instance.
THIS NOTE MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF
THE NOTE PURCHASE AGREEMENT.
THIS NOTE HAS BEEN ISSUED WITH “ORIGINAL ISSUE DISCOUNT” (WITHIN THE MEANING
OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). UPON WRITTEN
REQUEST, THE ISSUER WILL PROMPTLY MAKE AVAILABLE TO ANY HOLDER OF THIS NOTE THE
FOLLOWING INFORMATION: (1)
THE ISSUE PRICE AND ISSUE DATE OF THIS NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT ON THIS NOTE AND (3) THE YIELD TO MATURITY OF THIS NOTE. HOLDERS SHOULD
CONTACT THE CHIEF FINANCIAL OFFICER OF THE ISSUER AT 450 EAST 29TH STREET, 14TH FLOOR,
NEW YORK, NY 10016, ATTN: CHIEF OPERATING OFFICER.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”) OR UNDER THE SECURITIES LAWS OF CERTAIN STATES, AND MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, CHARGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
OR UNLESS SOLD IN ACCORDANCE WITH RULE 144 UNDER THE ACT.
[Signature Page Follows]
MEIRAGTX HOLDINGS PLC
By /s/ Rich Giroux
Name: Rich Giroux
Title: CFO and COO
Exhibit 10.39
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
November 9, 2022 by and among MeiraGTx Holdings plc, a Cayman Islands exempted company (the
“Company”), and Johnson & Johnson Innovation – JJDC, Inc. (the “Investor”).
RECITALS
A.
The Company and the Investor are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by the provisions of Section 4(a)(2) and/or Rule 506 of Regulation
D of the Securities Act of 1933, as amended (the “1933 Act”); and
B.
The Investor wishes to purchase from the Company, and the Company wishes to sell and issue to
the Investor, upon the terms and subject to the conditions stated in this Agreement, a certain number (the
“Shares”) of ordinary shares of the Company, nominal value $0.00003881 per share (the “Ordinary Shares”).
C.
Within three days of the sale of the Shares, the parties hereto will execute and deliver a
Registration Rights Agreement, substantially in the form attached hereto as Exhibit B (the “Registration Rights
Agreement”), pursuant to which the Company will agree to provide certain registration rights in respect of the
Shares under the 1933 Act, and the rules and regulations promulgated thereunder, and applicable state securities
laws.
In consideration of the mutual promises made herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
Definitions. For the purposes of this Agreement, the following terms shall have the meanings set
forth below:
“Affiliate” means, with respect to any Person, any other Person which directly or indirectly through one or
more intermediaries Controls, is controlled by, or is under common Control with, such Person.
“Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open
for the general transaction of business.
“Closing” has the meaning set forth in Section 3.1.
“Closing Date” has the meaning set forth in Section 3.1.
“Company’s Knowledge” means the actual knowledge of the executive officers (as defined in Rule 405
under the 1933 Act) of the Company.
“Control” (including the terms “controlling”, “controlled by” or “under common control with”) means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of voting securities, by contract or
otherwise.
“Environmental Laws” has the meaning set forth in Section 4.17.
“GAAP” has the meaning set forth in Section 4.6.
“Losses” has the meaning set forth in Section 8.2.
“Material Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of
operations, condition (financial or otherwise) or business of the Company and its Subsidiaries taken as a whole,
(ii) the legality or enforceability of this Agreement or (iii) the ability of the Company to perform its obligations
under this Agreement.
“Material Contract” means any contract, instrument or other agreement to which the Company is a party or
by which it is bound which is material to the business of the Company, including those that have been filed or
were required to have been filed as an exhibit to the SEC Filings pursuant to Item 601(b)(10) of Regulation S-K.
“Nasdaq” means The Nasdaq Global Select Market.
“Person” means an individual, corporation, partnership, limited liability company, trust, business trust,
association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
“Press Release” has the meaning set forth in Section 9.7.
“SEC” means the United States Securities and Exchange Commission.
“SEC Filings” means the Company’s filings with the SEC pursuant to the Securities Exchange of 1934
Act, as amended, filed since January 1, 2022.
“Shares” has the meaning set forth in the Recitals.
“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the 1934 Act (but
shall not be deemed to include the location and/or reservation of borrowable Ordinary Shares).
“Subscription Amount” means the aggregate amount to be paid for the Shares purchased hereunder.
“Subsidiary” of any Person means another Person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors
or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first Person.
“Trading Day” means a day on which Nasdaq is open for trading.
“Transfer Agent” has the meaning set forth in Section 7.8.
“Transaction Documents” means this Agreement and the Registration Rights Agreement.
“1933 Act” has the meaning set forth in the Recitals.
“1934 Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the
rules and regulations promulgated thereunder.
2.
Purchase and Sale of the Shares. On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company will issue and sell, and the Investor will purchase 3,742,514 Shares at a price per
Share equal to $6.68, for an aggregate purchase price of $24,999,993.52.
3.
Closing.
3.1.
The completion of the purchase and sale of the Shares (the “Closing”) shall occur remotely
via exchange of documents and signatures at a time (the “Closing Date”) to be agreed to by the Company and the
Investor.
3.2.
On the Closing Date, the Investor shall deliver or cause to be delivered to the Company the
Subscription Amount via wire transfer of immediately available funds pursuant to the wire instructions, as set
forth on Exhibit A hereto.
3.3.
On or within one business day of the Closing Date, the Company shall deliver or cause to
be delivered to the Investor a number of Shares, registered in the name of the Investor, in the amount as set forth
in this Agreement.
4.
Representations and Warranties of the Company. The Company hereby represents and warrants to
the Investor that, except as set forth in the schedules delivered herewith (the “Disclosure Schedules”) and except
as described in the SEC Filings (other than in risk factors and other cautionary language regarding forward-
looking statements), which qualify these representations and warranties in their entirety:
4.1.
Organization, Good Standing and Qualification. The Company is duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and to own or lease its properties. The Company is
duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary
unless the failure to so qualify has not had and could not reasonably be expected to have a Material Adverse
Effect. Each of the Company’s “Subsidiaries” (for purposes of this Agreement, as defined in Rule 405 under the
1933 Act) has been duly incorporated or organized, as the case may be, and is validly existing as a corporation,
partnership or limited liability company, as applicable, in good standing under the laws of the jurisdiction of its
incorporation or organization and has the power and authority (corporate or other) to carry on its business as now
conducted and to own or lease its properties. Each of the Company’s Subsidiaries is duly qualified as a foreign
corporation, partnership or limited liability company, as applicable, to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such
qualification or leasing necessary unless the failure to so qualify has not had and could not reasonably be expected
to have a Material Adverse Effect. All of the issued and outstanding capital stock or other equity or ownership
interests of each of the Company’s Subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and are owned by the Company, directly or through Subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance or adverse claim.
4.2.
Authorization. The Company has the requisite corporate power and authority and has taken
all requisite corporate action necessary for, and no further action on the part of the Company, its officers, directors
and shareholders is necessary for, (i) the authorization, execution and delivery of this Agreement, (ii) the
authorization of the performance of all obligations of the Company hereunder, and (iii) the authorization, issuance
and delivery of the Shares. This Agreement constitutes the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’
rights generally and to general equitable principles.
4.3.
Capitalization. The SEC Filings accurately reflect as of their respective dates (a) the
authorized shares of the Company; (b) the number of shares issued and outstanding; (c) the number of shares
issuable pursuant to the Company’s stock plans; and (d) the number of shares issuable and reserved for issuance
pursuant to securities (other than the Shares) exercisable for, or convertible into or exchangeable for any shares of
the Company. All of the issued and outstanding shares of the Company’s have been duly authorized and validly
issued and are fully paid, nonassessable and none of such shares were issued in violation of any pre-emptive rights
and such shares were issued in compliance in all material respects with applicable Cayman Islands, state and
federal securities law and any rights of third parties. Except as described in the SEC Filings, no Person is entitled
to pre-emptive or similar statutory or contractual rights with respect to the issuance by the Company of any
securities of the Company. Except as described in the SEC filings, there are no outstanding warrants, options,
convertible securities or other rights, agreements or arrangements of any character under which the Company is or
may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement. Except
as described in the SEC filings, there are no voting agreements, buy-sell agreements, option or right of first
purchase agreements or other agreements of any kind among the Company and any of the securityholders of the
Company relating to the securities of the Company held by them. Except as described in the SEC filings, no
Person has the right to require the Company to register any securities of the Company under the 1933 Act,
whether on a demand basis or in connection with the registration of securities of the Company for its own account
or for the account of any other Person.
The issuance and sale of the Shares hereunder will not obligate the Company to issue Ordinary
Shares or other securities to any other Person (other than the Investor) and will
not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security.
The Company does not have outstanding shareholder purchase rights or “poison pill” or any similar
arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the
occurrence of certain events.
4.4.
Valid Issuance. The Shares have been duly and validly authorized and, when issued and
paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and shall be free and
clear of all encumbrances and restrictions (other than those created by the Investor), except for restrictions on
transfer set forth herein or imposed by applicable securities laws.
4.5.
No Material Adverse Effect. Since June 30, 2022, (i) there has not been any event,
occurrence, development or condition of any character that has had or would reasonably be expected to have a
Material Adverse Effect; (ii) there have not been any changes in the authorized capital, assets, liabilities, financial
condition, business, Material Contracts or operations of the Company and its Subsidiaries, taken as a whole, from
that reflected in the consolidated financial statements of the Company and its Subsidiaries, except for any such
changes in the ordinary course of business which have not had or would not reasonably be expected to have a
Material Adverse Effect and (iii) the Company has not declared or made any dividend or distribution of cash or
other property to its shareholders. No material event, liability, fact, circumstance, occurrence or development has
occurred or exists, or is reasonably expected to occur or exist, with respect to the Company or its Subsidiaries or
their respective businesses, properties, operations, assets or financial condition that would be required to be
disclosed by the Company under applicable Law that has not been publicly disclosed.
4.6.
Financial Statements. The financial statements included in each SEC Filing comply in all
material respects with applicable accounting requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing (or to the extent corrected by a subsequent restatement) and present fairly,
in all material respects, the financial position of the Company as of the dates shown and its results of operations
and cash flows for the periods shown, and such financial statements have been prepared in conformity with United
States generally accepted accounting principles applied on a consistent basis during the periods involved
(“GAAP”) (except as may be disclosed therein or in the notes thereto, except that the unaudited quarterly financial
statements may not contain all footnotes required by GAAP, as permitted by Form 10-Q under the 1934 Act).
4.7.
Consents. The execution, delivery and performance by the Company of the Transaction
Documents and the offer, issuance and sale of the Shares require no consent of, action by or in respect of, or filing
with, any Person, governmental body, agency, or official other than (a) filings that have been made pursuant to
applicable state securities laws, (b) post-sale filings pursuant to applicable state and federal securities laws and (c)
filings pursuant to the rules and regulations of Nasdaq, each of which the Company has filed or undertakes to file
within the applicable time. Subject to the accuracy of the representations and warranties of the Investor set forth in
Section 5 hereof, the Company has taken all action necessary to exempt (i) the issuance and sale of the Shares and
(ii) the other transactions contemplated by the
Transaction Documents from the provisions of any shareholder rights plan or other “poison pill” arrangement, any
anti-takeover, business combination or control share law or statute binding on the Company or to which the
Company or any of its assets and properties is subject that is or could reasonably be expected to become
applicable to the Investors as a result of the transactions contemplated hereby, including without limitation, the
issuance of the Shares and the ownership, disposition or voting of the Shares by the Investors or the exercise of
any right granted to the Investors pursuant to this Agreement or the other Transaction Documents.
4.8.
Legal Proceedings. Except as described in the SEC Filings or as previously disclosed to the
Investor, there are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to
which the Company or any of its Subsidiaries is or may reasonably be expected to become a party or to which any
property of the Company is or may reasonably be expected to become the subject that, individually or in the
aggregate, if determined adversely to the Company or its Subsidiaries, could (i) reasonably be expected to have a
Material Adverse Effect or (ii) adversely affect or challenge the legality, validity or enforceability of the
Transaction Documents. Neither the Company nor any of its Subsidiaries, nor, to the Company’s Knowledge, any
director or officer thereof, is or has been the subject of any action involving a judicially filed claim of violation of
or liability under U.S. federal, state or foreign securities laws or a judicially filed claim of breach of fiduciary
duty. Except as described in the SEC Filings or as previously disclosed to the Investor, there has not been, and to
the Company’s Knowledge, there is not pending or threatened, any investigation by the SEC involving the
Company or any current or former director or officer of the Company. The SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by the Company or any of its
Subsidiaries under the 1933 Act or the 1934 Act.
4.9.
SEC Filings; Business. The Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by the Company under 1933 Act and the 1934 Act, including
pursuant to Section 13(a) or 15(d) of the 1934 Act, for the one year preceding the date hereof. The Company has
further made available to the Investor through the Electronic Data Gathering, Analysis, and Retrieval System (the
“EDGAR system”), true and complete copies of the SEC filings. The Company has made all filings required to be
made pursuant to the 1934 Act. The Company is engaged in all material respects only in the business described in
the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the
business of the Company.
4.10. Compliance. The Company is not (i) in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the
Company under), nor has the Company received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which
it or any of its properties is bound (whether or not such default or violation has been waived), (ii) in violation of
any judgment, decree or order of any court, arbitrator or governmental body or (iii) in violation of any statute,
rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health and safety, product quality and
safety and employment and labor matters,
except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.
4.11. Tax Matters. The Company and its Subsidiaries have filed all tax returns required to have
been filed by the Company or its Subsidiaries with all appropriate governmental agencies and have paid all taxes
shown thereon or otherwise owed by them. The Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 4.6 in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company or its Subsidiaries has not been finally
determined, except to the extent of any inadequacy that would not reasonably be expected to result in a Material
Adverse Effect. There are no material tax liens or claims pending, or to the Company’s Knowledge, threatened
against the Company or any of its Subsidiaries or any of their respective material assets or properties.
4.12. Use of Proceeds. The net proceeds of the sale of the Shares hereunder shall be used by the
Company to (1) maintain and accelerate its existing preclinical and research programs and (2) improve internal
manufacturing and quality check capabilities.
4.13. Title to Properties. Except as described in the SEC Filings, the Company and its
Subsidiaries have good and marketable title to all real properties and all other properties and assets owned by
them, in each case free from liens, encumbrances and defects, except such as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; and except as disclosed in the SEC Filings, the
Company and its Subsidiaries hold any leased real or personal property under valid, subsisting and enforceable
leases with which the Company and its Subsidiaries are in compliance and with no exceptions, except such as
would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.
4.14. No Conflict, Breach, Violation or Default. The execution, delivery and performance of the
Transaction Documents by the Company and the issuance and sale of the Shares in accordance with the provisions
thereof will not (i) conflict with or result in a breach or violation of (a) any of the terms and provisions of, or
constitute a default under, the Company’s Articles of Association, both as in effect on the date hereof (true and
complete copies of which have been made available to the Investor through the EDGAR system), or (b) assuming
the accuracy of the representations and warranties in Section 5, any applicable statute, rule, regulation or order of
any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or its
Subsidiaries, or any of their assets or properties.
4.15.
Intellectual Property. Except as disclosed in the SEC Filings, the Company and its
Subsidiaries own, possess, license or have other rights to use, the patents and patent applications, copyrights,
trademarks, service marks, trade names, service names and trade secrets described in the SEC Filings and as
necessary or material for use in connection with its business and which the failure to so have would have or
reasonably be expected to result in a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
There is no pending or, to the Company’s Knowledge, threatened action, suit, proceeding or claim by any Person
that the Company’s business or the business of its Subsidiaries as now conducted infringes or otherwise violates
any patent, trademark, copyright, trade secret or other proprietary rights of another. To
the Company’s Knowledge, there is no existing infringement by another Person of any of the Intellectual Property
Rights that would have or would reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of its
Intellectual Property Rights, except where failure to do so would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. All material licenses or other material agreements under which the
Company is granted Intellectual Property Rights are in full force and effect and, to the Company’s knowledge,
there is no material default by any other party thereto, except as would not reasonably be expected to have a
Material Adverse Effect. The Company has no reason to believe that the licensors under such licenses and other
agreements do not have and did not have all requisite power and authority to grant the rights to the Intellectual
Property Rights purported to be granted thereby. The consummation of the transactions contemplated hereby and
by the other Transaction Documents will not result in the alteration, loss, impairment of or restriction on the
Company’s or any of its Subsidiaries’ ownership or right to use any Intellectual Property Rights that is material to
the conduct of the Company’s business as currently conducted.
4.16. Certificates, Authorities and Permits. The Company and its Subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the
business now operated by them, except where failure to so possess would not reasonably be expected to,
individually or in the aggregate, result in a Material Adverse Effect. The Company and its Subsidiaries have not
received any notice of proceedings relating to the revocation or modification of any such certificate, authority or
permit that, if determined adversely to the Company or its Subsidiaries, would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
4.17. Environmental Matters. Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, neither the Company nor any of its Subsidiaries is in violation of
any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), has released any hazardous substances regulated by Environmental Law on to any real property that it
owns or operates, or has received any written notice or claim it is liable for any off-site disposal or contamination
pursuant to any Environmental Laws; and to the Company’s Knowledge, there is no pending or threatened
investigation that would reasonably be expected to lead to such a claim.
4.18. Compliance with Nasdaq Continued Listing Requirements. The Company is in compliance
with applicable Nasdaq continued listing requirements. There are no proceedings pending or, to the Company’s
Knowledge, threatened against the Company relating to the continued listing of the Ordinary Shares on Nasdaq
and the Company has not received any notice of, nor to the Company’s Knowledge is there any reasonable basis
for, the delisting of the Ordinary Shares from Nasdaq.
4.19. Brokers and Finders. No Person will have as a result of the transactions contemplated
hereby any valid right, interest or claim against or upon the Company or the
Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding
entered into by or on behalf of the Company.
4.20. No Directed Selling Efforts or General Solicitation. Neither the Company nor any of its
Subsidiaries nor any Person acting on its behalf has conducted any general solicitation or general advertising (as
those terms are used in Regulation D (“Regulation D”) promulgated under the 1933 Act) in connection with the
offer or sale of any of the Shares. The Company has offered the Shares for sale only to “accredited investors”
within the meaning of Rule 501 under the 1933 Act.
4.21. No Integrated Offering. Neither the Company nor any of its subsidiaries nor any Person
acting on its behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any
offers to buy any Company security, under circumstances that would adversely affect reliance by the Company on
Section 4(a)(2) for the exemption from registration for the transactions contemplated hereby or would require
registration of the Shares under the 1933 Act.
4.22. Private Placement. Assuming the accuracy of the representations and warranties of the
Investor set forth in Section 5, the offer and sale of the Shares to the Investor as contemplated hereby is exempt
from the registration requirements of the 1933 Act. The issuance and sale of the shares does not contravene the
rules and regulations of Nasdaq.
4.23. No Unlawful Payments. Neither the Company nor any of its Subsidiaries nor any director,
officer, or employee of the Company or any of its Subsidiaries nor, to the knowledge of the Company, any agent,
affiliate or other person associated with or acting on behalf of the Company or any of its Subsidiaries has (i) used
any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or
indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee,
including of any government-owned or controlled entity or of a public international organization, or any person
acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or
candidate for political office; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act
of 1977, as amended, or any applicable law or regulation implementing the OECD Convention on Combating
Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the
Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption laws; or (iv)
made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit,
including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper
payment or benefit. The Company and its Subsidiaries have instituted, maintain and enforce, and will continue to
maintain and enforce policies and procedures designed to promote and ensure compliance with all applicable anti-
bribery and anti-corruption laws.
4.24. Compliance with Anti-Money Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the applicable money laundering
statutes of all jurisdictions where the Company or any of its Subsidiaries conducts business, the rules and
regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced
by any governmental or regulatory agency (collectively, the “Anti-Money Laundering Laws”) and no action, suit
or proceeding by or before any court or governmental or regulatory agency, authority or body or any arbitrator
involving the Company or any of its Subsidiaries with respect to the Anti-Money Laundering Laws is pending or,
to the knowledge of the Company, threatened.
4.25. No Conflicts with Sanctions Laws. Neither the Company nor any of its Subsidiaries,
directors, officers or employees, nor, to the knowledge of the Company, any agent, or affiliate or other person
associated with or acting on behalf of the Company or any of its Subsidiaries is currently the subject or the target
of any sanctions administered or enforced by the U.S. Government, (including, without limitation, the Office of
Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State and including,
without limitation, the designation as a “specially designated national” or “blocked person”), the United Nations
Security Council, the European Union, His Majesty’s Treasury, or other relevant sanctions authority (collectively,
“Sanctions”), nor is the Company or any of its Subsidiaries located, organized or resident in a country or territory
that is the subject or the target of Sanctions, including, without limitation, Cuba, Iran, North Korea, Sudan, Syria,
and the Crimea Region of the Ukraine (each, a “Sanctioned Country”); and the Company will not directly or
indirectly use the proceeds of the offering of the Shares hereunder, or lend, contribute or otherwise make available
such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any
activities of or business with any person that, at the time of such funding or facilitation, is the subject or the target
of Sanctions, (ii) to fund or facilitate any activities of or business in any Sanctioned Country or (iii) in any other
manner that will result in a violation by any person (including any person participating in the transaction, whether
as underwriter, advisor, investor or otherwise) of Sanctions. For the past five years, the Company and its
Subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions
with any person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with
any Sanctioned Country.
4.26. Transactions with Affiliates. Except as disclosed in the SEC Filings, none of the executive
officers or directors of the Company or its Subsidiaries and, to the Company’s Knowledge, none of the employees
of the Company or its Subsidiaries is presently a party to any transaction with the Company (other than as holders
of stock options and/or warrants, and for services as employees, officers and directors) that is required to be
disclosed under Item 404 of Regulation S-K under the 1933 Act.
4.27.
Internal Controls. The Company has established and maintains disclosure controls and
procedures (as defined in Rules 13a-15 and 15d-15 under the 1934 Act), which are designed to ensure that
material information relating to the Company, including its consolidated Subsidiaries, is made known to the
Company’s principal executive officer and its principal financial officer by others within those entities. Except as
described in the SEC Filings, since the end of the Company’s most recent audited fiscal year, there have been no
significant deficiencies or material weakness in the Company’s internal control over financial reporting (whether
or not remediated) and no change in the Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal control
over financial reporting. The Company is not aware of any change in its internal controls over financial reporting
that has occurred during its most recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.
4.28. Required Filings. Except for the transactions contemplated by this Agreement, including
the acquisition of the Shares contemplated hereby, no event or circumstance has occurred or information exists
with respect to the Company or its business, properties, operations or financial condition, which, under applicable
law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed (assuming for this purpose that the SEC Filings are being incorporated by
reference into an effective registration statement filed by the Company under the 1933 Act).
4.29.
Investment Company. The Company is not required to be registered as, and is not an
Affiliate of, and immediately following the Closing will not be required to register as, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.
4.30. Tests and Preclinical and Clinical Trials. The studies, tests and preclinical and clinical trials
conducted by or, to the Company’s Knowledge, on behalf of the Company that are described in the SEC Filings
were and, if still pending, are being, conducted in all material respects in accordance with the protocols submitted
to the U.S. Food and Drug Administration (the “FDA”) or any foreign governmental body exercising comparable
authority, procedures and controls pursuant to, where applicable, accepted professional and scientific standards,
and all applicable laws and regulations; the descriptions of the studies, tests and preclinical and clinical trials
conducted by or, to the Company’s Knowledge, on behalf of the Company, and the results thereof, contained in
the SEC Filings are accurate and complete in all material respects; the Company is not aware of any other studies,
tests or preclinical and clinical trials, the results of which call into question the results described in the SEC
Filings; and the Company has not received any notices or correspondence from the FDA, any foreign, state or
local governmental body exercising comparable authority or any Institutional Review Board requiring the
termination, suspension, material modification or clinical hold of any studies, tests or preclinical or clinical trials
conducted by or on behalf of the Company.
4.31. Labor. Neither the Company nor any of its Subsidiaries is bound by or subject to any
collective bargaining agreement or any similar agreement with any organization representing its employees. No
labor problem or dispute with the employees of the Company and its Subsidiaries exists or, to the Company’s
Knowledge, is threatened, and the Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or contractors, that could have a Material Adverse Effect, whether or
not arising from transactions in the ordinary course of business, except as contemplated in the Company SEC
Filings.
4.32. Passive Foreign Investment Company; Controlled Foreign Company. Neither the Company
nor its Subsidiaries will be deemed to constitute a “passive foreign investment company” within the meaning of
26 USC §1297(a) or a “controlled foreign company” within the meaning of 26 USC §957.
4.33. Regulation M Compliance. The Company has not, and to the Company’s Knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of
the Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Shares, or
(iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities
of the Company.
4.34. No Disqualification Events. With respect to the Shares to be offered and sold hereunder in
reliance on Rule 506 under the 1933 Act, none of the Company, any of its predecessors, any affiliated issuer, any
director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial
owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting
power, nor any promoter (as that term is defined in Rule 405 under the 1933 Act) connected with the Company in
any capacity at the time of sale (each, an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is
subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act
(a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The
Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a
Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.
4.35. Other Covered Persons. The Company is not aware of any person (other than any Issuer
Covered Person) that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in
connection with the sale of any Shares.
4.36. Notice of Disqualification Events. The Company will notify the Investors in writing, prior
to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that
would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person.
4.37. Full Disclosure. The written materials delivered to the Investors in connection with the
transactions contemplated by the Transaction Documents, when considered together with the SEC filings, do not
contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they were made, not misleading. The
Company understands and confirms that the Investors will rely on the foregoing representations in effecting
transactions in securities of the Company.
5.
Company that:
Representations and Warranties of the Investor. The Investor hereby represents and warrants to the
5.1.
Organization and Existence. The Investor is a validly existing corporation and has all
requisite corporate power and authority to enter into and consummate the transactions contemplated hereby and to
carry out its obligations hereunder and thereunder, and to invest in the Shares pursuant to this Agreement.
5.2.
Authorization. The execution, delivery and performance by the Investor of this Agreement
has been duly authorized and this Agreement has been duly executed and when delivered will constitute the valid
and legally binding obligation of the Investor, enforceable against the Investor in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability, relating to or affecting creditors’ rights generally.
5.3.
Purchase Entirely for Own Account. The Shares to be received by the Investor hereunder
will be acquired for the Investor’s own account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the 1933 Act, and the Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same in violation of the 1933 Act without prejudice,
however, to the Investor’s right at all times to sell or otherwise dispose of all or any part of such Shares in
compliance with applicable federal and state securities laws. Nothing contained herein shall be deemed a
representation or warranty by the Investor to hold the Shares for any period of time. The Investor is not a broker-
dealer registered with the SEC under the 1934 Act or an entity engaged in a business that would require it to be so
registered.
5.4.
Investment Experience. The Investor acknowledges that it can bear the economic risk and
complete loss of its investment in the Shares and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.
5.5.
Disclosure of Information. The Investor has had an opportunity to receive, review and
understand all information related to the Company requested by it and to ask questions of and receive answers
from the Company regarding the Company, its business and the terms and conditions of the offering of the Shares,
and has conducted and completed its own independent due diligence. Based on the information the Investor has
deemed appropriate it has independently made its own analysis and decision to enter into this Agreement. The
Investor is relying exclusively on its own sources of information, investment analysis and due diligence (including
professional advice it deems appropriate) with respect to the execution, delivery and performance of this
Agreement, the Shares and the business, condition (financial and otherwise), management, operations, properties
and prospects of the Company, including but not limited to all business, legal, regulatory, accounting, credit and
tax matters. Neither such inquiries nor any other due diligence investigation conducted by the Investor shall
modify, limit or otherwise affect the Investor’s right to rely on the Company’s representations and warranties
contained in this Agreement.
5.6.
Restricted Securities. The Investor understands that the Shares are characterized as
“restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that under such laws and applicable regulations such
securities may be resold without registration under the 1933 Act only in certain limited circumstances.
5.7.
Legends. It is understood that, except as provided below, certificates evidencing the Shares
may bear the following or any similar legend:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE
TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES
MAY BE SOLD PURSUANT TO RULE 144 OR OTHER AVAILABLE EXEMPTION, OR
(III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.”
If required by the authorities of any state in connection with the issuance of sale of the Shares, the
legend required by such state authority.
5.8.
Accredited Investor. The Investor is (a) an “accredited investor” within the meaning of Rule
501(a)(1), (2), (3) or (7) under the 1933 Act and (b) an Institutional Account as defined in FINRA Rule 4512(c).
The investor is a sophisticated institutional investor with sufficient knowledge and experience in investing in
private placement transactions to properly evaluate the risks and merits of its purchase of the Shares.
5.9.
No General Solicitation. The Investor did not learn of the investment in the Shares as a
result of any general solicitation or general advertising.
5.10. Brokers and Finders. No Person will have as a result of the transactions contemplated
hereby any valid right, interest or claim against or upon the Company or an Investor for any commission, fee or
other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the
Investor.
5.11. Short Sales and Confidentiality Prior to the Date Hereof. Other than consummating the
transactions contemplated hereunder, the Investor has not, nor has any Person acting on behalf of or pursuant to
any understanding with the Investor, directly or indirectly executed any purchases or sales, including Short
Sales, of the securities of the Company during the period commencing as of the time that the Investor was first
contacted by the Company or any other Person regarding the transactions contemplated hereby. Other than to its
authorized representatives and advisors, the Investor has maintained the confidentiality of all disclosures made to
it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the
foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or
preclude any actions, with respect to the identification of the availability of, or securing of, available shares to
borrow in order to effect Short Sales or similar transactions in the future.
5.12. No Government Recommendation or Approval. The Investor understands that no United
States federal or state agency, or similar agency of any other country, has
reviewed, approved, passed upon, or made any recommendation or endorsement of the Company or the purchase
of the Shares.
5.13. No Intent to Effect a Change of Control; Ownership. The Investor has no present intent to
effect a “change of control” of the Company as such term is understood under the rules promulgated pursuant to
Section 13(d) of the 1934 Act and under the rules of Nasdaq.
5.14. No Conflicts. The execution, delivery and performance by the Investor of this Agreement
and the consummation of the transactions contemplated hereby will not (i) result in a violation of the
organizational documents of the Investor or (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Investor is a party, or (iii) to
the Investor’s knowledge, result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to the Investor, except in the case of clauses (ii) and (iii) above, for
such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of the Investor to perform its obligations hereunder.
5.15. No Rule 506 Disqualifying Activities. The Investor has not taken any of the actions set
forth in, and is not subject to, the disqualification provisions of Rule 506(d)(1) of the 1933 Act.
5.16. Residency. The Investor is a resident of the jurisdiction specified in its address in Section
9.4.
The Company acknowledges and agrees that the representations contained in this Section 5 shall not
modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained
herein.
6.
Conditions to Closing.
6.1.
Conditions to the Investor’s Obligations. The obligation of the Investor to purchase Shares
at the Closing is subject to the fulfillment to the Investor’s satisfaction, on or prior to the Closing Date, of the
following conditions, any of which may be waived by the Investor:
(a)
The representations and warranties made by the Company in Section 4 hereof shall be
true and correct in all material respects (or to the extent representations or warranties are qualified by materiality
or Material Adverse Effect, in all respects) as of the date hereof and on the Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which case such representation or
warranty shall be true and correct as of such earlier date. The Company shall have performed in all material
respects all obligations and covenants herein required to be performed by it on or prior to the Closing Date.
(b)
The Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary for consummation of the purchase and sale of the
Shares and the consummation of the other transactions contemplated by this Agreement, all of which shall be in
full force and effect.
(c)
Registration Rights Agreement.
Within three days of the Closing the Company shall have executed and delivered the
(d)
No judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority,
shall have been issued, and no action or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby.
(e)
There shall have been no Material Adverse Effect with respect to the Company since
the date hereof.
(f)
Within three days of the Closing the Company shall have delivered to the Investor a
Certificate, executed on behalf of the Company by its Chief Executive Officer or its Chief Financial Officer, dated
as of such date, certifying to the fulfillment of the conditions specified in subsections (a), (b), (d) and (e) of this
Section 6.1.
(g)
Within three days of the Closing the Company shall have delivered to the Investor a
Certificate, executed on behalf of the Company by its Chief Operating Officer, dated as of such date, certifying
the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the Shares, certifying the current versions of
the Articles of Association of the Company and certifying as to the signatures and authority of persons signing the
Transaction Documents and related documents on behalf of the Company.
(h)
Within three days of the Closing the Investor shall have received an opinion from each
of Latham & Watkins LLP, United States counsel for the Company, and Walkers (Cayman) LLP, Cayman Islands
counsel for the Company, and dated as of such date, in form and substance reasonably acceptable to the Investor.
(i)
No stop order or suspension of trading shall have been imposed by Nasdaq, the SEC or
any other governmental or regulatory body with respect to public trading in the Ordinary Shares.
6.2.
Conditions to Obligations of the Company. The Company’s obligation to sell and issue
Shares at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing
Date of the following conditions, any of which may be waived by the Company:
(a)
The representations and warranties made by the Investor in Section 5 hereof shall be
true and correct in all material respects when made, and shall be true and correct in all material respects on the
Closing Date with the same force and effect as if they had been made on and as of said date. The Investor shall
have performed in all material respects all obligations and covenants herein required to be performed by them on
or prior to the Closing Date.
(b)
The Investor shall have paid in full its Subscription Amount to the Company.
6.3.
Termination of Obligations to Effect Closing; Effects.
(a)
The obligations of the Company, on the one hand, and the Investor, on the other hand, to
effect the Closing shall terminate as follows:
(i)
(ii)
Upon the mutual written consent of the Company and the Investor;
By the Company if any of the conditions set forth in Section 6.2 shall have become
incapable of fulfillment, and shall not have been waived by the Company; or
(iii)
By the Investor if any of the conditions set forth in Section 6.1 shall have become
incapable of fulfillment, and shall not have been waived by the Investor; provided, however, that, except in the
case of clause (i) above, the party seeking to terminate its obligation to effect the Closing shall not then be in
breach of any of its representations, warranties, covenants or agreements contained in this Agreement if such
breach has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the
Closing.
(b)
Nothing in this Section 6.3 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or to impair the right of any party to compel
specific performance by any other party of its obligations under this Agreement.
7.
Covenants and Agreements of the Parties.
7.1.
Reports. The Company will furnish to the Investor and/or its assignees such information
relating to the Company as from time to time may reasonably be requested by the Investor and/or its assignees;
provided, however, that the Company shall not disclose material nonpublic information to the Investor, or to
advisors to or representatives of the Investor, unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information and provides the Investor, such advisors and
representatives with the opportunity to accept or refuse to accept such material nonpublic information for review
and the Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the
Company with respect thereto.
7.2.
No Conflicting Agreements. The Company will not take any action, enter into any
agreement or make any commitment that would conflict or interfere in any material respect with the Company’s
obligations to the Investor under the Transaction Documents.
7.3.
Form D; Blue Sky Filings. The Company shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to each
Investor at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of such actions promptly upon request of such Investor.
7.4.
Reporting Status. The Company shall timely file all reports required to be filed with the
SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would otherwise permit such
termination.
7.5.
Compliance with Laws. The Company will comply in all material respects with all
applicable laws, rules, regulations, orders and decrees of all governmental authorities.
7.6.
Nasdaq Listing. The Company will use commercially reasonable efforts to continue the
listing and trading of its Ordinary Shares on Nasdaq and, in accordance, therewith, will use commercially
reasonable efforts to comply in all respects with the Company’s reporting, filing and other obligations under the
bylaws or rules of such market or exchange, as applicable.
7.7.
Termination of Covenants. The provisions of Sections 7.1 through 7.5 shall terminate and
be of no further force and effect on the date on which the Company’s obligations under the Registration Rights
Agreement to register or maintain the effectiveness of any registration covering the Registrable Securities (as such
term is defined in the Registration Rights Agreement) shall terminate.
7.8.
Removal of Legends. In connection with any sale or disposition of the Shares by an
Investor pursuant to Rule 144 or pursuant to any other exemption under the 1933 Act such that the purchaser
acquires freely tradable shares and upon compliance by the Investor with the requirements of this Agreement, if
requested by the Investor, the Company shall cause the transfer agent for the Ordinary Shares (the “Transfer
Agent”) to timely remove any restrictive legends related to the book entry account holding such Shares and make
a new, unlegended entry for such book entry Shares sold or disposed of without restrictive legends, provided that
the Company has received customary representations and other documentation reasonably acceptable to the
Company in connection therewith. Subject to receipt by the Company of customary representations and other
documentation reasonably acceptable to the Company in connection therewith, upon the earlier of such time as the
Shares (i) have been registered under the 1933 Act pursuant to an effective registration statement, (ii) have been
sold pursuant to Rule 144, or (iii) are eligible for resale under Rule 144(b)(1) or any successor provision, the
Company shall (A) deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall make a
new, unlegended entry for such book entry Shares, and (B) cause its counsel to deliver to the Transfer Agent one
or more opinions to the effect that the removal of such legends in such circumstances may be effected under the
1933 Act. The Company shall be responsible for the fees of its Transfer Agent and all DTC fees associated with
such issuance.
7.9.
Subsequent Equity Sales. From the date hereof until six months after the Closing Date, the
Investor shall not, directly or indirectly, sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any
Ordinary Shares or any securities convertible into or exercisable or exchangeable for Ordinary Shares or enter into
any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of Ordinary Shares.
7.10. Securities Laws. The Investor hereby acknowledges its obligations under the U.S. federal
securities laws, including with respect to the prohibition of any person in possession of “material non-public
information” about a company from purchasing or selling, directly or indirectly, securities of such company
(including entering into short selling or hedge transactions involving such securities), or from communicating
such information to any other person under circumstances in which it is reasonably foreseeable that such person is
likely to purchase or sell such securities.
7.11. Passive Foreign Investment Company; Controlled Foreign Corporation. Not later than
forty-five (45) days after the end of Company’s fiscal year, the Company will determine whether it and each of its
Subsidiaries constitutes a “passive foreign investment company” (a “PFIC”) or a “controlled foreign corporation”
(a “CFC”) as defined for U.S. tax purposes for such fiscal year and if Company determines it is a PFIC or CFC,
will so advise each Investor. For each fiscal year of the Company, commencing with the first fiscal year for which
it is determined to be a PFIC, the Company and each of its Subsidiaries shall no later than ninety (90) days after
the end of such fiscal year, furnish the Investor with all information necessary for it to make a qualified electing
fund (“QEF”) election, including (i) a PFIC Annual Information Statement under Section 1295(b) of the U.S.
Internal Revenue Code, as amended (the “Code”) and (ii) all information necessary for it to complete IRS Form
8621 (or a successor form). All information shall be provided in English. The Company will obtain the advice of
one of the “big four” accounting firms to make the determinations and provide the information and statements as
described in this paragraph.
8.
Survival and Indemnification.
8.1.
Survival. The representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing of the transactions contemplated by this Agreement for the applicable statute
of limitations.
8.2.
Indemnification. The Company agrees to indemnify and hold harmless the Investor and its
Affiliates and their respective directors, officers, trustees, members, managers, employees and agents, and their
respective successors and assigns, from and against any and all losses, claims, damages, liabilities and expenses,
including without limitation reasonable attorney fees and disbursements and other expenses reasonably incurred in
connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and
the costs of enforcement thereof (collectively, “Losses”), to which such Person may become subject as a result of
or relating to (a) any breach of representation, warranty, covenant or agreement made by or to be performed on the
part of the Company under this Agreement or (b) any action instituted against the Investor or its Affiliates by any
stockholder of the Company who is not an Affiliate of the Investor, with respect to any of the transactions
contemplated by this Agreement (unless such action is based upon a breach of the Investor’s representations,
warranties or covenants under this Agreement or any conduct by the Investor or its Affiliates which constitutes
fraud, gross negligence, willful misconduct or malfeasance), and will reimburse any such Person for all such
amounts as they are incurred by such Person.
8.3.
Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder
shall (i) give prompt notice to the indemnifying party of any claim
with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the
indemnifying party has agreed to pay such fees or expenses, (b) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the
reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in which case, if the person notifies
the indemnifying party in writing that such person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf
of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give
notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be
liable for fees or expenses of more than one separate firm of attorneys at any time for such indemnified party. No
indemnifying party will, except with the consent of the indemnified party, which consent shall not be
unreasonably withheld, conditioned or delayed, consent to entry of any judgment or enter into any settlement that
does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation. No indemnified party will, except with the
consent of the indemnifying party, consent to entry of any judgment or enter into any settlement. The indemnity
agreements contained herein shall be in addition to any cause of action or similar right of the Investor or its
Affiliates against the Company or others and any liabilities the Company may be subject to pursuant to law.
9.
Miscellaneous.
9.1.
Successors and Assigns. This Agreement may not be assigned by a party hereto without the
prior written consent of the Company or the Investor, as applicable, provided, however, that the Investor may
assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or to a third party acquiring
some or all of its Shares in a transaction complying with applicable securities laws without the prior written
consent of the Company, provided such assignee agrees in writing to be bound by the provisions hereof that apply
to the Investor. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Without limiting the generality of the foregoing, in the event that
the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in
which the Ordinary Shares are converted into the equity securities of another Person, from and after the effective
time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the
obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term
“Shares” shall be deemed to refer to the securities received by the Investors in connection with such transaction.
Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto
or their respective permitted successors and assigns any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.
9.2.
Counterparts; Faxes; E-mail. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement may also be executed via facsimile or e-mail, which shall be deemed an original.
9.3.
Titles and Subtitles. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement.
9.4.
Notices. Unless otherwise provided, any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal
delivery, then such notice shall be deemed given upon such delivery, (ii) if given by facsimile, then such notice
shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight
air courier, then such notice shall be deemed given one Business Day after delivery to such carrier. All notices
shall be addressed to the party to be notified at the address as follows, or at such other address as such party may
designate by ten days’ advance written notice to the other party:
If to the Company:
MeiraGTx Holdings plc
450 East 29th Street, 14th Floor
New York, New York 10016
Attn: Rich Giroux
With a copy to: legalnotices@meiragtx.com
And a copy to:
Latham & Watkins LLP
200 Clarendon Street
Boston, Massachusetts 02116
Attn: Peter N. Handrinos, Esq.
If to the Investor:
Johnson & Johnson Innovation – JJDC, Inc.
410 George Street
New Brunswick, New Jersey 08091
Attn: Linda Vogel and Kelvin Lin
With a copy to: LVogel@ITS.JNJ.com; KLin18@ITS.JNJ.com;
JJDCOperations@its.jnj.com
And a copy to:
Ropes & Gray LLP
800 Boylston Street
Boston, Massachusetts 02199
Attn: Christopher D. Comeau
9.5.
Expenses. Within three days of the Closing, the Company has agreed to reimburse the
Investor up to $75,000 for its legal fees and expenses. Except as set forth herein to the contrary, the parties hereto
shall pay their own costs and expenses in connection herewith regardless of whether the transactions contemplated
hereby are consummated; it being understood that each of the Company and the Investor has relied on the advice
of its own respective counsel. In the event that legal proceedings are commenced by any party to this Agreement
against another party to this Agreement in connection with this Agreement, the party or parties which do not
prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys’
fees and other reasonable documented out-of-pocket costs and expenses incurred by the prevailing party in such
proceedings.
9.6.
Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the other party hereto.
9.7.
Publicity. Except as set forth below, no public release or announcement concerning the
transactions contemplated hereby shall be issued by the Investor without the prior written consent of the Company
(which consent shall not be unreasonably withheld), except as such release or announcement may be required by
law or the applicable rules or regulations of any securities exchange or securities market, in which case the
Investor shall allow the Company, to the extent reasonably practicable in the circumstances, reasonable time to
comment on such release or announcement in advance of such issuance. Notwithstanding the foregoing, the
Investor may identify the Company and the value of the Investor’s security holdings in the Company in
accordance with applicable investment reporting and disclosure regulations or internal policies without prior
notice to or consent from the Company. The Company shall not include the name of the Investor or any Affiliate
or investment adviser of the Investor in any press release or public announcement (which, for the avoidance of
doubt, shall not include any SEC Filing to the extent such disclosure is required by SEC rules and regulations)
without the prior written consent of the Investor (which consent shall not be unreasonably withheld). Within four
trading days following the date this Agreement is executed, the Company shall (i) issue a press release disclosing
all material terms of transactions contemplated by this Agreement (the “Press Release”) and/or (ii) file a Current
Report on Form 8-K attaching the press release described in the foregoing sentence (as applicable) as well as a
copy of this Agreement. In addition, the Company will make such filings and notices in the manner and time
required by the SEC or Nasdaq.
9.8.
Severability. Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof but shall be
interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and
any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any
provision of law which renders any provision hereof prohibited or unenforceable in any respect.
9.9.
Entire Agreement. This Agreement, including the signature pages and Exhibits constitute
the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede
all prior agreements and understandings, both oral and written, between the parties with respect to the subject
matter hereof and thereof.
9.10. Further Assurances. The parties shall execute and deliver all such further instruments and
documents and take all such other actions as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the agreements herein contained.
9.11. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of New York without regard to the
choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United States District Court for the Southern
District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
9.12. Limitation of Liability. Notwithstanding anything herein to the contrary, the Company
acknowledges and agrees that the liability of the Investor arising directly or indirectly under this Agreement of
any and every nature whatsoever shall be satisfied solely out of the assets of the Investor and that no trustee,
officer, other investment vehicle or any other Affiliate of the Investor or any investor, shareholder or holder of
shares of beneficial interest of the Investor shall be personally liable for any liabilities of the Investor.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized
officers to execute this Agreement as of the date first above written.
COMPANY:
MEIRAGTX HOLDINGS PLC
By: /s/ Richard Giroux
Name: Richard Giroux
Title: Chief Operating Officer
INVESTOR:
Johnson & Johnson Innovation – JJDC, Inc.
By: /s/Asish Xavier
Name: Asish Xavier
Title: VP, Venture Investments
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of
November 9, 2022 by and among MeiraGTx Holdings plc, a Cayman Islands exempted company (the
“Company”), and Johnson & Johnson Innovation – JJDC, Inc. (the “Investor”) in connection with that certain
Securities Purchase Agreement by and among the Company and the Investor (the “Purchase Agreement”).
Capitalized terms used herein have the respective meanings ascribed thereto in the Purchase Agreement unless
otherwise defined herein.
Exhibit 10.40
The parties hereby agree as follows:
1.
Certain Definitions.
As used in this Agreement, the following terms shall have the following meanings:
“Investor” means the Investor identified above and any Affiliate or permitted transferee of the Investor
who is a subsequent holder of Registrable Securities.
“Confidential Treatment Request” means any confidential treatment request submitted to the Securities
and Exchange Commission (the “SEC”) pursuant to Rule 406 of the Securities Act of 1933, as amended (the
“1933 Act”) relating to certain exhibits to be filed with the Registration Statement.
“Prospectus” means (i) the prospectus included in any Registration Statement, as amended or
supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and by all other amendments and supplements to
the prospectus, including post-effective amendments and all material incorporated by reference in such
prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the 1933 Act.
“Register,” “registered” and “registration” refer to a registration made by preparing and filing a
Registration Statement or similar document in compliance with the 1933 Act, and the declaration or ordering of
effectiveness of such Registration Statement or document.
“Registrable Securities” means (i) the Shares and (ii) any other securities issued or issuable as a dividend
or other distribution with respect to, in exchange for or in replacement of the Shares, whether by merger, charter
amendment or otherwise; provided, that, a security shall cease to be a Registrable Security upon (A) sale pursuant
to a Registration Statement or Rule 144 under the 1933 Act, or (B) such security becoming eligible for sale
without restriction (other than volume limitations) by the Investor pursuant to Rule 144 and without the
requirement to be in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under the 1933 Act.
“Registration Statement” means any registration statement of the Company under the 1933 Act that covers
the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and
supplements to such Registration Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
2.
Registration.
(a)
Registration Statements. Within 180 days following the date of this Agreement (the “Filing
Deadline”), the Company shall prepare and file with the SEC one Registration Statement covering the resale of all
of the Registrable Securities. Subject to any SEC comments, such Registration Statement shall include the plan of
distribution attached hereto as Exhibit A. Such Registration Statement also shall cover, to the extent allowable
under the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of
additional shares of Ordinary Shares resulting from share splits, share dividends or similar transactions with
respect to the Registrable Securities. Such Registration Statement shall not include any Ordinary Shares or other
securities for the account of any other holder without the prior written consent of the Investor. Such Registration
Statement (and each amendment or supplement thereto) shall be provided in accordance with Section 3(c) to the
Investor prior to its filing or other submission. If a Registration Statement covering the Registrable Securities is
not filed with the SEC on or prior to the Filing Deadline, the Company will make pro rata payments to the
Investor, as liquidated damages and not as a penalty, in an amount equal to 1% of the aggregate amount invested
by the Investor for each 30-day period or pro rata for any portion thereof following the Filing Deadline for which
no Registration Statement is filed with respect to the Registrable Securities. Such payments shall constitute the
Investor’s exclusive monetary remedy for such events, but shall not affect the right of the Investor to seek
injunctive relief. Such payments shall be made to the Investor in cash no later than three (3) Business Days after
the end of each 30-day period (the “Payment Date”). Interest shall accrue at the rate of 1% per month on any such
liquidated damages payments that shall not be paid by the Payment Date until such amount is paid in full.
(b)
Expenses. The Company will pay all reasonable expenses associated with each Registration
Statement, including filing and printing fees, the Company’s counsel and accounting fees and expenses, costs
associated with clearing the Registrable Securities for sale under applicable state securities laws, listing fees, fees
and expenses of one counsel to the Investor and the Investor’s reasonable expenses in connection with the
registration, but excluding discounts, commissions and fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals with respect to the Registrable Securities being sold.
(c)
Effectiveness.
(i)
The Company shall use reasonable best efforts to have the Registration Statements
declared effective as soon as practicable. The Company shall notify the Investor by e-mail as promptly as
practicable, and in any event, within forty-eight (48) hours, after any Registration Statement is declared effective
and shall simultaneously provide the Investor with copies of any related Prospectus to be used in connection with
the sale or other disposition of the securities covered thereby. If (A) a Registration Statement is not declared
effective by the SEC prior to the earlier of (i) five (5) Business Days after the SEC informs the Company in
writing that no review of such Registration Statement will be made or that the SEC has no further comments on
such Registration Statement or (ii) the 30th day after the Filing Deadline (or the 90th day if the SEC reviews such
Registration Statement) (the “Effectiveness Deadline”) or (B) after a Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to such Registration Statement for any reason (including
without
2
limitation by reason of a stop order, or the Company’s failure to update such Registration Statement), but
excluding any Allowed Delay (as defined below), then the Company will make pro rata payments to the Investor
then holding Registrable Securities, as liquidated damages and not as a penalty, in an amount equal to 1% of the
aggregate amount invested by the Investor for each thirty (30)-day period or pro rata for any portion thereof
following the date by which such Registration Statement should have been effective (the “Blackout Period”). Such
payments shall constitute the Investor’s exclusive monetary remedy for such events, but shall not affect the right
of the Investor to seek injunctive relief. The amounts payable as liquidated damages pursuant to this paragraph
shall be paid monthly within three (3) Business Days of the last day of each month following the commencement
of the Blackout Period until the termination of the Blackout Period (the “Blackout Period Payment Date”). Such
payments shall be made to the Investor in cash. Interest shall accrue at the rate of 1% per month on any such
liquidated damages payments that shall not be paid by the Blackout Payment Date until such amount is paid in
full.
(ii)
For not more than thirty (30) consecutive days or for a total of not more than sixty
(60) days in any twelve (12) month period, the Company may suspend the use of any Prospectus included in any
Registration Statement contemplated by this Section in the event that the Company determines in good faith that
such suspension is necessary to (A) delay the disclosure of material non-public information concerning the
Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests
of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that
such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in the case of the
Prospectus in light of the circumstances under which they were made, not misleading (an “Allowed Delay”);
provided, that the Company shall promptly (a) notify the Investor in writing of the commencement of an Allowed
Delay, but shall not (without the prior written consent of the Investor) disclose to the Investor any material non-
public information giving rise to an Allowed Delay, (b) advise the Investor in writing to cease all sales under such
Registration Statement until the end of the Allowed Delay and (c) use reasonable best efforts to terminate an
Allowed Delay as promptly as practicable.
(d)
Rule 415; Cutback. If at any time the SEC takes the position that the offering of some or all
of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous
basis under the provisions of Rule 415 under the 1933 Act or requires the Investor to be named as an
“underwriter,” the Company shall use reasonable best efforts to persuade the SEC that the offering contemplated
by such Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as
defined in Rule 415 and that the Investor is not an “underwriter.” The Investor shall have the right to select one
legal counsel to review and oversee any registration or matters pursuant to this Section 2(d), including
participation in any meetings or discussions with the SEC regarding the SEC’s position and to comment on any
written submission made to the SEC with respect thereto. No such written submission with respect to this matter
shall be made to the SEC to which the Investor’s counsel reasonably objects. In the event that, despite the
Company’s reasonable best efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its
position, the Company shall (i) remove from such Registration Statement such portion of the Registrable
Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and
resale of the Registrable Securities as the SEC may require to assure the Company’s compliance
3
with the requirements of Rule 415 (collectively, the “SEC Restrictions”); provided, however, that the Company
shall not agree to name the Investor as an “underwriter” in such Registration Statement without the prior written
consent of the Investor. No liquidated damages shall accrue as to any Cut Back Shares until such date as the
Company is able to effect the registration of such Cut Back Shares in accordance with any SEC Restrictions
applicable to such Cut Back Shares (such date, the “Restriction Termination Date”). In furtherance of the
foregoing, the Investor shall provide the Company with prompt written notice of its sale of substantially all of the
Registrable Securities under such Registration Statement such that the Company will be able to file one or more
additional Registration Statements covering the Cut Back Shares. From and after the Restriction Termination Date
applicable to any Cut Back Shares, all of the provisions of this Section 2 (including the Company’s obligations
with respect to the filing of a Registration Statement and its obligations to use reasonable best efforts to have such
Registration Statement declared effective within the time periods set forth herein and the liquidated damages
provisions relating thereto) shall again be applicable to such Cut Back Shares; provided, however, that (i) the
Filing Deadline and/or the Qualification Deadline, as applicable, for such Registration Statement including such
Cut Back Shares shall be ten (10) Business Days after such Restriction Termination Date, and (ii) the date by
which the Company is required to obtain effectiveness with respect to such Cut Back Shares shall be the 60th day
immediately after the Restriction Termination Date (or the 90th day if the SEC reviews such Registration
Statement).
3.
Company Obligations. The Company will use reasonable best efforts to effect the registration of
the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as
expeditiously as possible:
(a)
use reasonable best efforts to cause such Registration Statement to become effective and to
remain continuously effective for a period that will terminate upon the earlier of (i) the date on which all
Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, and
(ii) the date on which all Registrable Securities covered by such Registration Statement may be sold without
restriction (other than volume limitations) pursuant to Rule 144 and without the requirement to be in compliance
with Rule 144(c)(1) (or any successor thereto) promulgated under the 1933 Act (the “Effectiveness Period”) and
advise the Investor promptly in writing when the Effectiveness Period has expired;
(b)
prepare and file with the SEC such amendments and post-effective amendments to such
Registration Statement and the related Prospectus as may be necessary to keep such Registration Statement
effective for the Effectiveness Period and to comply with the provisions of the 1933 Act and the 1934 Act with
respect to the distribution of all of the Registrable Securities covered thereby;
(c)
provide copies to and permit a counsel designated by the Investor to review each
Registration Statement and all amendments and supplements thereto no fewer than three (3) days prior to their
filing with the SEC and not file any document to which such counsel reasonably objects;
(d)
furnish to the Investor whose Registrable Securities are included in any Registration
Statement (i) promptly after the same is prepared and filed with the SEC, if requested by the Investor, one (1)
copy of any Registration Statement and any amendment
4
thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter
written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from
the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential treatment), and (ii) such
number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements
thereto and such other documents as the Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by the Investor;
(e)
use reasonable best efforts to (i) prevent the issuance of any stop order or other suspension
of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible
moment;
(f)
prior to any public offering of Registrable Securities, use reasonable best efforts to register
or qualify or cooperate with the Investor and its counsel in connection with the registration or qualification of such
Registrable Securities for the offer and sale under the securities or blue sky laws of such jurisdictions requested by
the Investor and do any and all other commercially reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to
do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f),
(ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this
Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction;
(g)
use reasonable best efforts to cause all Registrable Securities covered by a Registration
Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;
(h)
promptly notify the Investor, at any time prior to the end of the Effectiveness Period, upon
discovery that, or upon the happening of any event as a result of which, the Prospectus includes an untrue
statement of a material fact or omits to state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then existing, and promptly prepare, file with
the SEC and furnish to such holder a supplement to or an amendment of such Prospectus as may be necessary so
that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(i)
otherwise use reasonable best efforts to comply with all applicable rules and regulations of
the SEC under the 1933 Act and the 1934 Act, including, without limitation, Rule 172 under the 1933 Act, file
any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under
the 1933 Act, promptly inform the Investor in writing if, at any time during the Effectiveness Period, the
Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investor is required to
deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as
may be reasonably necessary to facilitate the registration of the Registrable Securities
5
hereunder, and make available to its security holders, as soon as reasonably practicable, but not later than the
Availability Date (as defined below), an earnings statement covering a period of at least twelve (12) months,
beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the 1933 Act, including Rule 158 promulgated thereunder (for the purpose of this
subsection 3(i), “Availability Date” means the 45th day following the end of the fourth fiscal quarter that includes
the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the
Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal quarter);
(j)
with a view to making available to the Investor the benefits of Rule 144 (or its successor
rule) and any other rule or regulation of the SEC that may at any time permit the Investor to sell Ordinary Shares
to the public without registration, the Company covenants and agrees to: (i) make and keep public information
available, as those terms are understood and defined in Rule 144, until the earlier of (A) six months after such date
as all of the Registrable Securities may be sold without restriction by the holders thereof pursuant to Rule 144 or
any other rule of similar effect or (B) such date as there are no longer Registrable Securities; (ii) file with the SEC
in a timely manner all reports and other documents required of the Company under the 1934 Act; and (iii) furnish
electronically to the Investor upon request, as long as the Investor owns any Registrable Securities, (A) a written
statement by the Company that it has complied with the reporting requirements of the 1934 Act, (B) a copy of or
electronic access to the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q,
and (C) such other information as may be reasonably requested in order to avail the Investor of any rule or
regulation of the SEC that permits the selling of any such Registrable Securities without registration; and
(k)
if requested by an Investor, cooperate with the Investor to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to an
effective Registration Statement, which certificates shall be free, to the extent permitted by the Purchase
Agreements and applicable law, of all restrictive legends, and to enable such certificates to be in such
denominations and registered in such names as the Investor may request.
4.
Due Diligence Review; Information. If the Investor is required under applicable securities laws to
be described in a Registration Statement as an “underwriter,” the Company shall, upon reasonable prior notice,
make available, during normal business hours, for inspection and review by the Investor, advisors to and
representatives of the Investor (who may or may not be affiliated with the Investor and who are reasonably
acceptable to the Company) (collectively, the “Inspectors”), all pertinent financial and other records, and all other
corporate documents and properties of the Company (collectively, the “Records”) as may be reasonably necessary
for the purpose of such review, and cause the Company’s officers, directors and employees, within a reasonable
time period, to supply all such information reasonably requested by the Inspectors (including, without limitation,
in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from
time to time after the filing and effectiveness of such Registration Statement for the sole purpose of enabling the
Investor and its accountants and attorneys to conduct such due diligence solely for the purpose of establishing a
due diligence defense to underwriter liability under the 1933 Act; provided, however, that each Inspector shall
6
agree to hold in strict confidence and shall not make any disclosure (except to the Investor) or use of any Record
or other information which the Company determines in good faith to be confidential, and of which determination
the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena or order from a court or
government body of competent jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any other Transaction Document.
Notwithstanding the foregoing, the Company shall not disclose material nonpublic information to the
Investor, or to advisors to or representatives of the Investor, unless prior to disclosure of such information the
Company identifies such information as being material nonpublic information and provides the Investor, such
advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic
information for review and the Investor wishing to obtain such information entered or enters into an appropriate
confidentiality agreement with the Company with respect thereto.
5.
Obligations of the Investor.
(a)
The Investor shall furnish in writing to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably request. At least five
(5) Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify
the Investor of the information the Company requires from the Investor if the Investor elects to have any of the
Registrable Securities included in such Registration Statement. The Investor shall provide such information to the
Company at least two (2) Business Days prior to the first anticipated filing date of such Registration Statement if
the Investor elects to have any of the Registrable Securities included in such Registration Statement.
(b)
The Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the preparation and filing of a Registration
Statement hereunder, unless the Investor has notified the Company in writing of its election to exclude all of its
Registrable Securities from such Registration Statement.
(c)
The Investor agrees that, upon receipt of any notice from the Company of either (i) the
commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the happening of an event pursuant to
Section 3(h) hereof, the Investor will immediately discontinue disposition of Registrable Securities pursuant to
any Registration Statement covering such Registrable Securities, until the Investor is advised by the Company that
such dispositions may again be made.
(d)
The Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it or an exemption therefrom in connection with sales of Registrable
Securities pursuant to any Registration Statement.
7
6.
Indemnification.
(a)
Indemnification by the Company. The Company will indemnify and hold harmless the
Investor and its officers, directors, members, employees and agents, successors and assigns, and each other
person, if any, who controls the Investor within the meaning of the 1933 Act, against any losses, claims, damages
or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement or omission or alleged omission of any material fact contained in any
Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof,
and will reimburse the Investor, and each such officer, director or member and each such controlling person for
any legal or other documented, out-of-pocket expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company
will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or
is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by the Investor or any such controlling person in writing specifically for
use in such Registration Statement or Prospectus, (ii) the use by the Investor of an outdated or defective
Prospectus after the Company has notified the Investor in writing that such Prospectus is outdated or defective or
(iii) the Investor’s failure to send or give a copy of the Prospectus or supplement (as then amended or
supplemented), if required (and not exempted) to the Persons asserting an untrue statement or omission or alleged
untrue statement or omission at or prior to the written confirmation of the sale of Registrable Securities.
Indemnification by the Investor. The Investor agrees, severally but not jointly, to indemnify
(b)
and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees,
shareholders and each person who controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expense (including reasonable attorney fees) resulting from any untrue statement
of a material fact or any omission of a material fact required to be stated in any Registration Statement or
Prospectus or preliminary Prospectus or amendment or supplement thereto or necessary to make the statements
therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in
any information furnished in writing by the Investor to the Company specifically for inclusion in such
Registration Statement or Prospectus or amendment or supplement thereto. In no event shall the liability of the
Investor be greater in amount than the dollar amount of the proceeds (net of all expense paid by the Investor in
connection with any claim relating to this Section 6 and the amount of any damages the Investor has otherwise
been required to pay by reason of such untrue statement or omission) received by the Investor upon the sale of the
Registrable Securities included in such Registration Statement giving rise to such indemnification obligation.
(c)
Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder
shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel
8
shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses,
(b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its
counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims
(in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the
defense of such claim on behalf of such person); and provided, further that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any
such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding
in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for
all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, which
shall not be unreasonably withheld or conditioned, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect of such claim or litigation.
(d)
Contribution. If for any reason the indemnification provided for in the preceding paragraphs
(a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly
specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified
party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative
fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations.
No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act shall be
entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the
contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the
amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to
such contribution obligation.
7.
Miscellaneous.
(a)
Amendments and Waivers. This Agreement may be amended only by a writing signed by
the Company and the Investor. The Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have obtained the written consent to such
amendment, action or omission to act, of the Investor.
(b)
Notices. All notices and other communications provided for or permitted hereunder shall be
made as set forth in Section 9.4 of the Purchase Agreement.
(c)
Assignments and Transfers by Investor. The provisions of this Agreement shall be binding
upon and inure to the benefit of the Investor and its respective successors and
9
assigns. The Investor may transfer or assign, in whole or from time to time in part, to one or more persons its
rights hereunder in connection with the transfer of Registrable Securities by the Investor to such person, provided
that (i) the Investor agrees in writing with the transferee or assignee to assign such rights and a copy of such
agreement is furnished to the Company within a reasonable time after such assignment; (ii) the Company is within
a reasonable time after such transfer or assignment, furnished with written notice of (A) the name and address of
such transferee or assignee and (B) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment the further disposition of such
securities by the transferee or assignee is restricted under the 1933 Act or applicable state securities laws; (iv) at
or before the time the Company receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein
and (v) such transfer shall have been made in accordance with the applicable requirements of the Purchase
Agreement.
(d)
Assignments and Transfers by the Company. This Agreement may not be assigned by the
Company (whether by operation of law or otherwise) without the prior written consent of the Investor, provided,
however, that in the event that the Company is a party to a merger, consolidation, share exchange or similar
business combination transaction in which Ordinary Shares are converted into the equity securities of another
Person, from and after the effective time of such transaction, such Person shall, by virtue of such transaction, be
deemed to have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer
to such Person and the term “Registrable Securities” shall be deemed to include the securities received by the
Investor in connection with such transaction unless such securities are otherwise freely tradable by the Investor
after giving effect to such transaction.
(e)
Benefits of the Agreement. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(f)
Counterparts; Faxes. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same instrument. This
Agreement may also be executed via facsimile, which shall be deemed an original.
(g)
Titles and Subtitles. The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this Agreement.
(h)
Severability. Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be
enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in
any jurisdiction shall not
10
invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable
law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
(i)
Further Assurances. The parties shall execute and deliver all such further instruments and
documents and take all such other actions as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the agreements herein contained.
(j)
Entire Agreement. This Agreement is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
(k)
Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of New York without regard to the
choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United States District Court for the Southern
District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action
or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for
the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
[remainder of page intentionally left blank]
11
IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized
officers to execute this Agreement as of the date first above written.
COMPANY:
MEIRAGTX HOLDINGS PLC
By:/s/ Richard Giroux
Name: Richard Giroux
Title: Chief Operating Officer
12
INVESTOR:
JOHNSON & JOHNSON INNOVATION – JJDC, INC.
By:/s/ Asish Xavier
Name: Asish Xavier
Title: VP, Venture Investments
Exhibit A
Plan of Distribution
We are registering ordinary shares previously issued to permit the resale of these ordinary shares by the holders of
the ordinary shares from time to time after the date of this prospectus. We will not receive any of the proceeds
from the sale by the selling shareholders. We will bear all fees and expenses incident to our obligation to register
the ordinary shares, except that, if the ordinary shares are sold through underwriters or broker-dealers, the selling
shareholders will be responsible for underwriting discounts or commissions or agent’s commissions.
The selling shareholders may sell all or a portion of the ordinary shares beneficially owned by them and offered
hereby from time to time directly or through one or more underwriters, broker-dealers or agents. The ordinary
shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at
varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions,
which may involve crosses or block transactions,
● on any national securities exchange or quotation service on which the securities may be listed or quoted at
the time of sale;
● in the over-the-counter market;
● in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
● through the writing of options, whether such options are listed on an options exchange or otherwise;
● ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
● block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell
a portion of the block as principal to facilitate the transaction;
● purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
● an exchange distribution in accordance with the rules of the applicable exchange;
● privately negotiated transactions;
● short sales;
● sales pursuant to Rule 144 of the Securities Act;
● broker-dealers may agree with the selling shareholders to sell a specified number of such shares at a
stipulated price per share;
● a combination of any such methods of sale; and
● any other method permitted pursuant to applicable law.
If the selling shareholders effect such transactions by selling ordinary shares to or through underwriters, broker-
dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling shareholders or commissions from purchasers of the ordinary shares
for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the
types of transactions involved). In connection with sales of the ordinary shares or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of
our ordinary shares in the course of hedging in positions they assume. The selling shareholders may also sell
ordinary shares short and deliver ordinary shares covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales. The selling shareholders may also loan or pledge
ordinary shares to broker-dealers that in turn may sell such shares.
The selling shareholders may pledge or grant a security interest in some or all of the shares of our ordinary shares
owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the ordinary shares from time to time pursuant to this prospectus or other applicable provisions
of the Securities Act, amending, if necessary, the list of selling shareholders to include the pledgee, transferee or
other successors in interest as selling shareholders under this prospectus. The selling shareholders also may
transfer and donate the shares of our ordinary shares in other circumstances in which case the transferees, donees,
pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The selling shareholders and any broker-dealer participating in the distribution of the ordinary shares may be
deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts
or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts
under the Securities Act. At the time a particular offering of the ordinary shares is made, a prospectus supplement,
if required, will be distributed which will set forth the aggregate amount of shares of our ordinary shares being
offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling shareholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.
Under the securities laws of some states, the ordinary shares may be sold in such states only through registered or
licensed brokers or dealers. In addition, in some states the ordinary shares may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from registration or qualification is available
and is complied with.
There can be no assurance that any selling shareholder will sell any or all of the ordinary shares registered
pursuant to the registration statement, of which this prospectus forms a part.
The selling shareholders and any other person participating in such distribution will be subject to applicable
provisions of the Exchange Act, and the rules and regulations thereunder, including, without limitation,
Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the ordinary
shares by the selling shareholders and any other participating person. Regulation M may also restrict the ability of
any person engaged in the distribution of the ordinary shares to engage in market-making activities with respect to
the ordinary shares. All of the foregoing may affect the marketability of the ordinary shares and the ability of any
person or entity to engage in market-making activities with respect to the ordinary shares.
We will pay all expenses of the registration of the ordinary shares pursuant to the registration statement of which
this prospectus forms a part, including, without limitation, SEC filing fees and expenses of compliance with state
securities or “blue sky” laws; provided, however, that the selling shareholders will pay all underwriting discounts
and selling commissions, if any. We will indemnify the selling shareholders against liabilities, including some
liabilities under the Securities Act, or the selling shareholders will be entitled to contribution. We may be
indemnified by the selling shareholders against civil liabilities, including liabilities under the Securities Act, that
may arise from any written information furnished to us by the selling shareholders specifically for use in this
prospectus or we may be entitled to contribution.
Once sold under the registration statement of which this prospectus forms a part, the ordinary shares will be freely
tradable in the hands of persons other than our affiliates.
Legal Name of Subsidiary
BRI-Alzan, Inc.
MeiraGTx B.V.
MeiraGTx Netherlands B.V.
MeiraGTx Limited
MeiraGTx, LLC
MeiraGTx UK Limited
MeiraGTx UK II Limited
MeiraGTx Ireland DAC
MeiraGTx Neurosciences, Inc.
MeiraGTx Bio Inc.
MeiraGTx Belgium
MeiraGTx Therapeutics, Inc.
SUBSIDIARIES OF MEIRAGTX HOLDINGS PLC
Jurisdiction of Organization
Exhibit 21
Delaware
Netherlands
Netherlands
England and Wales
Delaware
England and Wales
England and Wales
Ireland
Delaware
Delaware
Belgium
Delaware
EXHIBIT 23.1
We consent to the incorporation by reference in the following Registration Statements:
Consent of Independent Registered Public Accounting Firm
(1) Registration Statement (Form S-8 No. 333-225535) pertaining to the 2016 Equity Incentive Plan, 2018 Incentive Award Plan and
2018 Employee Share Purchase Plan of MeiraGTx Holdings plc,
(2) Registration Statement (Form S-3 No. 333-232527) of MeiraGTx Holdings plc,
(3) Registration Statement (Form S-3 No. 333-232677) of MeiraGTx Holdings plc, and
(4) Registration Statement (Form S-8 No. 333-257164) pertaining to the 2018 Incentive Award Plan and 2018 Employee Share
Purchase Plan of MeiraGTx Holdings plc;
of our report dated March 14, 2023, with respect to the consolidated financial statements of MeiraGTx Holdings plc included in this
Annual Report (Form 10-K) of MeiraGTx Holdings plc for the year ended December 31, 2022.
/s/ Ernst & Young LLP
Jericho, New York
March 14, 2023
CERTIFICATION
Exhibit 31.1
I, Alexandria Forbes, certify that:
1.
I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of MeiraGTx Holdings plc;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: March 14, 2023
By:
/s/ Alexandria Forbes
Alexandria Forbes
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
I, Richard Giroux, certify that:
CERTIFICATION
1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended December 31, 2022 of MeiraGTx Holdings plc;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: March 14, 2023
By:
/s/ Richard Giroux
Richard Giroux
Chief Financial Officer and Chief Operating Officer
(Principal Financial Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report on Form 10-K of MeiraGTx Holdings plc (the “Company”) for the year ended December 31,
2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as
adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
Date: March 14, 2023
By:
/s/ Alexandria Forbes
Alexandria Forbes
President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report on Form 10-K of MeiraGTx Holdings plc (the “Company”) for the year ended December 31,
2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as
adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
Date: March 14, 2023
By:
/s/ Richard Giroux
Richard Giroux
Chief Financial Officer and Chief Operating Officer
(Principal Financial Officer)